HERTZ GLOBAL HOLDINGS, INC 10-Q

htzz-20220630 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________________________________________________________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number Exact Name of Registrant as Specified in its Charter, Principal Executive Office Address and Telephone Number State of Incorporation I.R.S. Employer Identification No. 001-37665 HERTZ GLOBAL HOLDINGS, INC Delaware 61-1770902 8501 Williams Road, Estero, Florida 33928 (239) 301-7000 001-07541 THE HERTZ CORPORATION Delaware 13-1938568 8501 Williams Road, Estero, Florida 33928 (239) 301-7000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which Registered Hertz Global Holdings, Inc. Common Stock Par value $0.01 per share HTZ Nasdaq Global Select Hertz Global Holdings, Inc. Warrants to purchase common stock Each exercisable for one share of Hertz Global Holdings, Inc. common stock at an exercise price of $13.80 per share, subject to adjustment HTZWW Nasdaq Global Select The Hertz Corporation None None None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Hertz Global Holdings, Inc. Yes ☒ No ☐ The Hertz Corporation Yes ☐ No ☒ 1 (Note: As a voluntary filer, The Hertz Corporation is not subject to the filing requirements of Section 13 or 15(d) of the Exchange Act. The Hertz Corporation has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it was subject to such filing requirements.) Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Hertz Global Holdings, Inc. Yes ☒ No ☐ The Hertz Corporation Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Hertz Global Holdings, Inc. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ The Hertz Corporation Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Hertz Global Holdings, Inc. Yes ☐ No ☒ The Hertz Corporation Yes ☐ No ☒ Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐ Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class Shares Outstanding as of July 21, 2022 Hertz Global Holdings, Inc. Common Stock, par value $0.01 per share 360,326,081 The Hertz Corporation (1) Common Stock, par value $0.01 per share 100 (1) (100% owned by Rental Car Intermediate Holdings, LLC) Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements (Unaudited) 1 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 36 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 61 ITEM 4. Controls and Procedures 61 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 62 ITEM 1A. Risk Factors 62 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 62 ITEM 3. Defaults Upon Senior Securities 63 ITEM 5. Other Information 63 ITEM 6. Exhibits 63 SIGNATURE 64 EXHIBIT INDEX 65 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Index Page Hertz Global Holdings, Inc. and Subsidiaries Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 2 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 3 Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021 4 Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2022 and 2021 5 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 6 The Hertz Corporation and Subsidiaries Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 9 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 10 Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021 11 Condensed Consolidated Statements of Changes in Stockholder's Equity (Deficit) for the Three and Six Months Ended June 30, 2022 and 2021 12 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 13 Notes to the Condensed Consolidated Financial Statements Note 1 Background 15 Note 2 Basis of Presentation 15 Note 3 Divestitures 16 Note 4 Revenue Earning Vehicles 16 Note 5 Debt 17 Note 6 Leases 22 Note 7 Income Tax (Provision) Benefit 22 Note 8 Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global 23 Note 9 Stock-Based Compensation 25 Note 10 Financial Instruments 26 Note 11 Fair Value Measurements 27 Note 12 Contingencies and Off-Balance Sheet Commitments 29 Note 13 Related Party Transactions 31 Note 14 Segment Information 31 Note 15 Reorganization Items, Net 34 1 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (In millions, except par value and share data) June 30, 2022 December 31, 2021 ASSETS Cash and cash equivalents $ 1,041 $ 2,258 Restricted cash and cash equivalents: Vehicle 221 77 Non-vehicle 301 316 Total restricted cash and cash equivalents 522 393 Total cash and cash equivalents and restricted cash and cash equivalents 1,563 2,651 Receivables: Vehicle 136 62 Non-vehicle, net of allowance of $ 42 and $ 48 , respectively 839 696 Total receivables, net 975 758 Prepaid expenses and other assets 1,094 1,017 Revenue earning vehicles: Vehicles 13,962 10,836 Less: accumulated depreciation ( 1,632 ) ( 1,610 ) Total revenue earning vehicles, net 12,330 9,226 Property and equipment, net 605 608 Operating lease right-of-use assets 1,562 1,566 Intangible assets, net 2,893 2,912 Goodwill 1,044 1,045 Total assets (1) $ 22,066 $ 19,783 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable: Vehicle $ 182 $ 56 Non-vehicle 477 516 Total accounts payable 659 572 Accrued liabilities 1,048 863 Accrued taxes, net 206 157 Debt: Vehicle 10,411 7,921 Non-vehicle 2,981 2,986 Total debt 13,392 10,907 Public Warrants 811 1,324 Operating lease liabilities 1,493 1,510 Self-insured liabilities 470 463 Deferred income taxes, net 1,258 1,010 Total liabilities (1) 19,337 16,806 Commitments and contingencies Stockholders' equity: Preferred stock, $ 0.01 par value, no shares issued and outstanding — — Common stock, $ 0.01 par value, 477,722,177 and 477,233,278 shares issued, respectively, and 368,386,372 and 449,782,424 shares outstanding, respectively 5 5 Treasury stock, at cost, 109,335,805 and 27,450,854 common shares, respectively ( 2,321 ) ( 708 ) Additional paid-in capital 6,274 6,209 Retained earnings (Accumulated deficit) ( 949 ) ( 2,315 ) Accumulated other comprehensive income (loss) ( 280 ) ( 214 ) Total stockholders' equity 2,729 2,977 Total liabilities and stockholders' equity $ 22,066 $ 19,783 (1) Hertz Global Holdings, Inc.'s consolidated total assets as of June 30, 2022 and December 31, 2021 include total assets of variable interest entities (“VIEs”) of $ 838 million and $ 734 million, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of June 30, 2022 and December 31, 2021 include total liabilities of VIEs of $ 837 million and $ 733 million, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Pledges Related to Vehicle Financing" in Note 5, "Debt," for further information. The accompanying notes are an integral part of these financial statements. 2 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In millions, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 2,344 $ 1,873 $ 4,154 $ 3,161 Expenses: Direct vehicle and operating 1,199 946 2,252 1,724 Depreciation of revenue earning vehicles and lease charges, net 106 116 47 359 Non-vehicle depreciation and amortization 36 50 69 104 Selling, general and administrative 257 172 492 321 Interest expense, net: Vehicle 45 98 50 202 Non-vehicle 41 91 80 135 Total interest expense, net 86 189 130 337 Other (income) expense, net 2 ( 10 ) — ( 13 ) Reorganization items, net — 633 — 677 (Gain) from the sale of a business — ( 8 ) — ( 400 ) Change in fair value of Public Warrants ( 461 ) — ( 511 ) — Total expenses 1,225 2,088 2,479 3,109 Income (loss) before income taxes 1,119 ( 215 ) 1,675 52 Income tax (provision) benefit ( 179 ) 46 ( 309 ) ( 33 ) Net income (loss) 940 ( 169 ) 1,366 19 Net (income) loss attributable to noncontrolling interests — 1 — 2 Net income (loss) attributable to Hertz Global $ 940 $ ( 168 ) $ 1,366 $ 21 Weighted-average common shares outstanding: Basic 398 160 415 158 Diluted 424 160 443 158 Earnings (loss) per common share: Basic $ 2.36 $ ( 1.05 ) $ 3.29 $ 0.13 Diluted $ 1.13 $ ( 1.05 ) $ 1.93 $ 0.13 The accompanying notes are an integral part of these financial statements. 3 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Unaudited (In millions) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income (loss) $ 940 $ ( 169 ) $ 1,366 $ 19 Other comprehensive income (loss): Foreign currency translation adjustments ( 59 ) ( 7 ) ( 66 ) 10 Total other comprehensive income (loss) ( 59 ) ( 7 ) ( 66 ) 10 Total comprehensive income (loss) 881 ( 176 ) 1,300 29 Comprehensive (income) loss attributable to noncontrolling interests — 1 — 2 Comprehensive income (loss) attributable to Hertz Global $ 881 $ ( 175 ) $ 1,300 $ 31 The accompanying notes are an integral part of these financial statements. 4 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Unaudited (In millions) Preferred Stock Shares Preferred Stock Amount Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Deficit (1) Accumulated Other Comprehensive Income (Loss) Treasury Stock Shares Treasury Stock Amount Stockholders' Equity Attributable to Hertz Global Non- controlling Interests (2) Total Stockholders' Equity Balance as of: December 31, 2020 — $ — 156 $ 2 $ 3,047 $ ( 2,681 ) $ ( 212 ) 2 $ ( 100 ) $ 56 $ 37 $ 93 Net income (loss) — — — — — 190 — — — 190 ( 1 ) 189 Other comprehensive income (loss) — — — — — — 17 — — 17 — 17 Stock-based compensation charges — — — — 2 — — — — 2 — 2 Distributions to noncontrolling interests — — — — — — — — — — ( 11 ) ( 11 ) March 31, 2021 — — 156 2 3,049 ( 2,491 ) ( 195 ) 2 ( 100 ) 265 25 290 Net income (loss) — — — — — ( 168 ) — — — ( 168 ) ( 1 ) ( 169 ) Other comprehensive income (loss) — — — — — — ( 7 ) — — ( 7 ) — ( 7 ) Cancellation of common and treasury shares in exchange for new common shares — — ( 142 ) ( 2 ) ( 98 ) — — ( 2 ) 100 — — — Cancellation of stock-based awards — — — — ( 10 ) — — — — ( 10 ) — ( 10 ) Distributions to common stockholders — — — — ( 239 ) — — — — ( 239 ) — ( 239 ) Contribution from Plan Sponsors — — 277 3 2,778 — — — — 2,781 — 2,781 Rights Offering, net — — 180 2 1,796 — — — — 1,798 — 1,798 Public Warrants issuance — — — — ( 800 ) — — — — ( 800 ) — ( 800 ) Preferred stock issuance, net 2 1,433 — — — — — — — — — — Distributions to noncontrolling interests, net — — — — — — — — — ( 5 ) ( 5 ) June 30, 2021 2 $ 1,433 471 $ 5 $ 6,476 $ ( 2,659 ) $ ( 202 ) — $ — $ 3,620 $ 19 $ 3,639 (1) Net income (loss) is computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to accumulated deficit in the accompanying unaudited condensed consolidated balance sheet. (2) See "767 Auto Leasing LLC" in Note 13, "Related Party Transactions." HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Unaudited (In millions) Preferred Stock Shares Preferred Stock Amount Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Treasury Stock Shares Treasury Stock Amount Total Stockholders' Equity Balance as of: December 31, 2021 — $ — 450 $ 5 $ 6,209 $ ( 2,315 ) $ ( 214 ) 27 $ ( 708 ) $ 2,977 Net income (loss) — — — — — 426 — — — 426 Other comprehensive income (loss) — — — — — — ( 7 ) — — ( 7 ) Net settlement on vesting of restricted stock — — — — ( 4 ) — — — — ( 4 ) Stock-based compensation charges, net of tax — — — — 28 — — — — 28 Public Warrant exercises (1) — — — — 4 — — — — 4 Share repurchases — — ( 35 ) — — — — 35 ( 722 ) ( 722 ) March 31, 2022 — — 415 5 6,237 ( 1,889 ) ( 221 ) 62 ( 1,430 ) 2,702 Net income (loss) — — — — — 940 — — — 940 Other comprehensive income (loss) — — — — — — ( 59 ) — — ( 59 ) Stock-based compensation charges, net of tax — — — — 36 — — — — 36 Public Warrant exercises (1) — — — — 1 — — — — 1 Share repurchases — — ( 47 ) — — — — 47 ( 891 ) ( 891 ) June 30, 2022 — $ — 368 $ 5 $ 6,274 $ ( 949 ) $ ( 280 ) 109 $ ( 2,321 ) $ 2,729 (1) See Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global." The accompanying notes are an integral part of these financial statements. 5 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In millions) Six Months Ended June 30, 2022 2021 Cash flows from operating activities: Net income (loss) $ 1,366 $ 19 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and reserves for revenue earning vehicles, net 145 420 Depreciation and amortization, non-vehicle 69 104 Amortization of deferred financing costs and debt discount (premium) 25 98 Loss on extinguishment of debt — 8 Stock-based compensation charges 64 2 Provision for receivables allowance 23 64 Deferred income taxes, net 249 ( 16 ) Reorganization items, net — 314 (Gain) loss from the sale of a business — ( 400 ) Change in fair value of Public Warrants ( 511 ) — (Gain) loss on financial instruments ( 65 ) 2 Other ( 3 ) ( 10 ) Changes in assets and liabilities: Non-vehicle receivables ( 200 ) ( 214 ) Prepaid expenses and other assets ( 87 ) ( 67 ) Operating lease right-of-use assets 79 154 Non-vehicle accounts payable ( 32 ) 94 Accrued liabilities 233 ( 11 ) Accrued taxes, net 52 91 Operating lease liabilities ( 93 ) ( 160 ) Self-insured liabilities 15 ( 27 ) Net cash provided by (used in) operating activities 1,329 465 Cash flows from investing activities: Revenue earning vehicles expenditures ( 6,089 ) ( 4,136 ) Proceeds from disposal of revenue earning vehicles 2,887 1,199 Non-vehicle capital asset expenditures ( 59 ) ( 17 ) Proceeds from non-vehicle capital assets disposed of or to be disposed of 6 10 Collateral payments — ( 303 ) Collateral returned in exchange for letters of credit 19 114 Return of (investment in) equity investments ( 15 ) — Proceeds from the sale of a business, net of cash sold — 818 Other — ( 1 ) Net cash provided by (used in) investing activities ( 3,251 ) ( 2,316 ) The accompanying notes are an integral part of these financial statements. 6 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In millions) Six Months Ended June 30, 2022 2021 Cash flows from financing activities: Proceeds from issuance of vehicle debt 7,379 8,939 Repayments of vehicle debt ( 4,824 ) ( 8,120 ) Proceeds from issuance of non-vehicle debt — 3,139 Repayments of non-vehicle debt ( 10 ) ( 6,341 ) Payment of financing costs ( 38 ) ( 151 ) Proceeds from Plan Sponsors — 2,781 Proceeds from Rights Offering, net — 1,635 Proceeds from the issuance of preferred stock, net — 1,433 Distributions to common stockholders — ( 239 ) Proceeds from exercises of Public Warrants 3 — Share repurchases ( 1,647 ) — Early redemption payments — ( 85 ) Contributions from (distributions to) noncontrolling interests — ( 15 ) Other ( 4 ) — Net cash provided by (used in) financing activities 859 2,976 Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents ( 25 ) ( 8 ) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period ( 1,088 ) 1,117 Cash and cash equivalents and restricted cash and cash equivalents at beginning of period (1) 2,651 1,578 Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 1,563 $ 2,695 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest, net of amounts capitalized: Vehicle $ 92 $ 203 Non-vehicle 74 158 Income taxes, net of refunds 37 2 Supplemental disclosures of non-cash information: Purchases of revenue earning vehicles included in accounts payable, net of incentives $ 128 $ 39 Sales of revenue earning vehicles included in vehicle receivables 81 33 Purchases of non-vehicle capital assets included in accounts payable 21 24 Revenue earning vehicles and non-vehicle capital assets acquired through finance lease 6 56 Public Warrants issuance — 800 Public Warrant exercises 3 — The accompanying notes are an integral part of these financial statements. 7 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In millions) Six Months Ended June 30, 2022 2021 Accrual for purchases of treasury shares 20 — Backstop equity issuance — 164 (1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which were held for sale at December 31, 2020, prior to the completion of the Donlen Sale in the first quarter of 2021, as disclosed in Note 3, "Divestitures." The accompanying notes are an integral part of these financial statements. 8 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (In millions, except par value and share data) June 30, 2022 December 31, 2021 ASSETS Cash and cash equivalents $ 1,041 $ 2,257 Restricted cash and cash equivalents: Vehicle 221 77 Non-vehicle 301 316 Total restricted cash and cash equivalents 522 393 Total cash and cash equivalents and restricted cash and cash equivalents 1,563 2,650 Receivables: Vehicle 136 62 Non-vehicle, net of allowance of $ 42 and $ 48 , respectively 839 695 Total receivables, net 975 757 Prepaid expenses and other assets 1,093 1,016 Revenue earning vehicles: Vehicles 13,962 10,836 Less: accumulated depreciation ( 1,632 ) ( 1,610 ) Total revenue earning vehicles, net 12,330 9,226 Property and equipment, net 605 608 Operating lease right-of-use assets 1,562 1,566 Intangible assets, net 2,893 2,912 Goodwill 1,044 1,045 Total assets (1) $ 22,065 $ 19,780 LIABILITIES AND STOCKHOLDER'S EQUITY Accounts payable: Vehicle $ 182 $ 56 Non-vehicle 477 516 Total accounts payable 659 572 Accrued liabilities 1,027 809 Accrued taxes, net 206 157 Debt: Vehicle 10,411 7,921 Non-vehicle 2,981 2,986 Total debt 13,392 10,907 Operating lease liabilities 1,493 1,510 Self-insured liabilities 470 463 Deferred income taxes, net 1,262 1,012 Total liabilities (1) 18,509 15,430 Commitments and contingencies Stockholder's equity: Common stock, $ 0.01 par value, 3,000 shares authorized and 100 shares issued and outstanding — — Additional paid-in capital 5,606 7,190 Retained earnings (Accumulated deficit) ( 1,770 ) ( 2,626 ) Accumulated other comprehensive income (loss) ( 280 ) ( 214 ) Total stockholder's equity 3,556 4,350 Total liabilities and stockholder's equity $ 22,065 $ 19,780 (1) The Hertz Corporation's consolidated total assets as of June 30, 2022 and December 31, 2021 include total assets of VIEs of $ 838 million and $ 734 million, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of June 30, 2022 and December 31, 2021 include total liabilities of VIEs of $ 837 million and $ 733 million, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Pledges Related to Vehicle Financing" in Note 5, "Debt," for further information. The accompanying notes are an integral part of these financial statements. 9 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In millions) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 2,344 $ 1,873 $ 4,154 $ 3,161 Expenses: Direct vehicle and operating 1,199 946 2,252 1,724 Depreciation of revenue earning vehicles and lease charges, net 106 116 47 359 Non-vehicle depreciation and amortization 36 50 69 104 Selling, general and administrative 257 172 492 321 Interest expense, net: Vehicle 45 98 50 202 Non-vehicle 41 91 80 135 Total interest expense, net 86 189 130 337 Other (income) expense, net 2 ( 10 ) — ( 13 ) Reorganization items, net — 469 — 513 (Gain) from the sale of a business — ( 8 ) — ( 400 ) Total expenses 1,686 1,924 2,990 2,945 Income (loss) before income taxes 658 ( 51 ) 1,164 216 Income tax (provision) benefit ( 178 ) 46 ( 308 ) ( 33 ) Net income (loss) 480 ( 5 ) 856 183 Net (income) loss attributable to noncontrolling interests — 1 — 2 Net income (loss) attributable to Hertz $ 480 $ ( 4 ) $ 856 $ 185 The accompanying notes are an integral part of these financial statements. 10 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Unaudited (In millions) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income (loss) $ 480 $ ( 5 ) $ 856 $ 183 Other comprehensive income (loss): Foreign currency translation adjustments ( 59 ) ( 7 ) ( 66 ) 10 Total other comprehensive income (loss) ( 59 ) ( 7 ) ( 66 ) 10 Total comprehensive income (loss) 421 ( 12 ) 790 193 Comprehensive (income) loss attributable to noncontrolling interests — 1 — 2 Comprehensive income (loss) attributable to Hertz $ 421 $ ( 11 ) $ 790 $ 195 The accompanying notes are an integral part of these financial statements. 11 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT) Unaudited (In millions, except share data) Common Stock Shares Common Stock Amount Additional Paid-In Capital Due To Affiliate Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Stockholder's Equity Attributable to Hertz Noncontrolling Interests (1) Total Stockholder's Equity (Deficit) Balance as of: December 31, 2020 100 $ — $ 3,953 $ — $ ( 3,783 ) $ ( 212 ) $ ( 42 ) $ 37 $ ( 5 ) Net income (loss) — — — — 190 — 190 ( 1 ) 189 Other comprehensive income (loss) — — — — — 17 17 — 17 Stock-based compensation charges — — 2 — — — 2 — 2 Distributions to noncontrolling interests — — — — — — — ( 11 ) ( 11 ) March 31, 2021 100 $ — 3,955 — ( 3,593 ) ( 195 ) 167 25 192 Net income (loss) — — — — ( 4 ) — ( 4 ) ( 1 ) ( 5 ) Due to Hertz Holdings — — — 65 — — 65 — 65 Other comprehensive income (loss) — — — — — ( 7 ) ( 7 ) — ( 7 ) Cancellation of stock-based awards — — ( 10 ) — — — ( 10 ) — ( 10 ) Contributions from Hertz Holdings — — 5,638 — — — 5,638 — 5,638 Distributions to noncontrolling interests — — — — — — — ( 5 ) ( 5 ) June 30, 2021 100 $ — $ 9,583 $ 65 $ ( 3,597 ) $ ( 202 ) $ 5,849 $ 19 $ 5,868 Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholder's Equity Balance as of: December 31, 2021 100 $ — $ 7,190 $ ( 2,626 ) $ ( 214 ) $ 4,350 Net income (loss) — — — 376 — 376 Other comprehensive income (loss) — — — — ( 7 ) ( 7 ) Stock-based compensation charges — — 28 — — 28 Dividends paid to Hertz Holdings (2) — — ( 767 ) — — ( 767 ) March 31, 2022 100 — 6,451 ( 2,250 ) ( 221 ) 3,980 Net income (loss) — — — 480 — 480 Other comprehensive income (loss) — — — — ( 59 ) ( 59 ) Stock-based compensation charges — — 36 — — 36 Dividends paid to Hertz Holdings (2) — — ( 881 ) — — ( 881 ) June 30, 2022 100 $ — $ 5,606 $ ( 1,770 ) $ ( 280 ) $ 3,556 (1) See "767 Auto Leasing LLC" in Note 13, "Related Party Transactions." (2) See "Share Repurchase Programs for Common Stock" in Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global," for additional information. The accompanying notes are an integral part of these financial statements. 12 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In millions) Six Months Ended June 30, 2022 2021 Cash flows from operating activities: Net income (loss) $ 856 $ 183 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and reserves for revenue earning vehicles, net 145 420 Depreciation and amortization, non-vehicle 69 104 Amortization of deferred financing costs and debt discount (premium) 25 98 Loss on extinguishment of debt — 8 Stock-based compensation charges 64 2 Provision for receivables allowance 23 64 Deferred income taxes, net 249 ( 16 ) Reorganization items, net — 150 (Gain) loss from the sale of a business — ( 400 ) (Gain) loss on financial instruments ( 65 ) 2 Other ( 3 ) ( 10 ) Changes in assets and liabilities: Non-vehicle receivables ( 200 ) ( 214 ) Prepaid expenses and other assets ( 87 ) ( 67 ) Operating lease right-of-use assets 79 154 Non-vehicle accounts payable ( 32 ) 94 Accrued liabilities 233 ( 11 ) Accrued taxes, net 52 91 Operating lease liabilities ( 93 ) ( 160 ) Self-insured liabilities 15 ( 27 ) Net cash provided by (used in) operating activities 1,330 465 Cash flows from investing activities: Revenue earning vehicles expenditures ( 6,089 ) ( 4,136 ) Proceeds from disposal of revenue earning vehicles 2,887 1,199 Non-vehicle capital asset expenditures ( 59 ) ( 17 ) Proceeds from non-vehicle capital assets disposed of or to be disposed of 6 10 Collateral payments — ( 303 ) Collateral returned in exchange for letters of credit 19 114 Return of (investment in) equity investments ( 15 ) — Proceeds from the sale of a business, net of cash sold — 818 Other — ( 1 ) Net cash provided by (used in) investing activities ( 3,251 ) ( 2,316 ) Cash flows from financing activities: Proceeds from issuance of vehicle debt 7,379 8,939 Repayments of vehicle debt ( 4,824 ) ( 8,120 ) The accompanying notes are an integral part of these financial statements. 13 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In millions) Six Months Ended June 30, 2022 2021 Proceeds from issuance of non-vehicle debt — 3,139 Repayments of non-vehicle debt ( 10 ) ( 6,341 ) Payment of financing costs ( 38 ) ( 151 ) Contributions from Hertz Holdings — 5,638 Early redemption payments — ( 85 ) Dividends paid to Hertz Holdings ( 1,648 ) — Contributions from (distributions to) noncontrolling interests — ( 15 ) Net cash provided by (used in) financing activities 859 3,004 Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents ( 25 ) ( 8 ) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period ( 1,087 ) 1,145 Cash and cash equivalents and restricted cash and cash equivalents at beginning of period (1) 2,650 1,550 Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 1,563 $ 2,695 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest, net of amounts capitalized: Vehicle $ 92 $ 203 Non-vehicle 74 158 Income taxes, net of refunds 37 2 Supplemental disclosures of non-cash information: Purchases of revenue earning vehicles included in accounts payable, net of incentives $ 128 $ 39 Sales of revenue earning vehicles included in vehicle receivables 81 33 Purchases of non-vehicle capital assets included in accounts payable 21 24 Revenue earning vehicles and non-vehicle capital assets acquired through finance lease 6 56 (1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which were held for sale at December 31, 2020, prior to the completion of the Donlen Sale in the first quarter of 2021, as disclosed in Note 3, "Divestitures." The accompanying notes are an integral part of these financial statements. 14 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unaudited Note 1— Background Hertz Global Holdings, Inc. ("Hertz Global" when including its subsidiaries and VIEs and "Hertz Holdings" when excluding its subsidiaries and VIEs) was incorporated in Delaware in 2015 to serve as the top-level holding company for Rental Car Intermediate Holdings, LLC, which wholly owns The Hertz Corporation ("Hertz" and interchangeably with Hertz Global, the "Company"), Hertz Global's primary operating company. Hertz was incorporated in Delaware in 1967 and is a successor to corporations that have been engaged in the vehicle rental and leasing business since 1918. On May 22, 2020, as a result of the impact from the COVID-19 global pandemic, Hertz Global, Hertz and certain of their direct and indirect subsidiaries in the U.S. and Canada (the "Debtors") filed voluntary petitions for relief under chapter 11 of title 11 ("Chapter 11") of the U.S. Bankruptcy Code (the "Chapter 11 Cases") in the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). On June 10, 2021, a plan of reorganization (the "Plan of Reorganization") was confirmed by the Bankruptcy Court and on June 30, 2021, the Plan of Reorganization became effective and the Debtors emerged from Chapter 11. Hertz operates its vehicle rental business globally primarily through the Hertz, Dollar and Thrifty brands from company-owned, licensee and franchisee locations in the United States ("U.S."), Africa, Asia, Australia, Canada, the Caribbean, Europe, Latin America, the Middle East and New Zealand. The Company also sells vehicles through Hertz Car Sales and operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets. As disclosed in Note 3, "Divestitures," on March 30, 2021 the Company completed the sale of substantially all of the assets and certain liabilities of its Donlen subsidiary (the "Donlen Sale"), a business which provided vehicle leasing and fleet management services. Note 2— Basis of Presentation Basis of Presentation This Quarterly Report on Form 10-Q combines the quarterly reports on Form 10-Q for the quarterly period ended June 30, 2022 of Hertz Global and Hertz. Hertz Global consolidates Hertz for financial statement purposes, therefore, disclosures that relate to activities of Hertz also apply to Hertz Global. In the sections that combine disclosure of Hertz Global and Hertz, this report refers to actions as being actions of the Company, or Hertz Global, which is appropriate because the business is one enterprise and Hertz Global operates the business through Hertz. When appropriate, Hertz Global and Hertz are named specifically for their individual disclosures and any significant differences between the operations and results of Hertz Global and Hertz are separately disclosed and explained. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The Company's vehicle rental operations are typically a seasonal business, with decreased levels of business in the winter months and heightened activity during the spring and summer months for the majority of countries where the Company generates revenues. Certain charges related to the Chapter 11 Cases were recorded as reorganization items, net in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021 pursuant to the provisions of Accounting Standards Codification (“ASC”) 852, Reorganizations . See Note 15, "Reorganization Items, Net," for additional information. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Actual results could differ materially from those estimates. The December 31, 2021 unaudited condensed consolidated balance sheet data is derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP. The information included in this 15 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Quarterly Report on Form 10-Q should be read in conjunction with information included in the Company's Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K"), as filed with the Securities and Exchange Commission ("SEC") on February 23, 2022. Principles of Consolidation The unaudited condensed consolidated financial statements of Hertz Global include the accounts of Hertz Global, its wholly owned and majority owned U.S. and international subsidiaries and its VIEs, as applicable. The unaudited condensed consolidated financial statements of Hertz include the accounts of Hertz, its wholly owned and majority owned U.S. and international subsidiaries and its VIEs, as applicable. The Company consolidates a VIE when it is deemed the primary beneficiary of the VIE. The Company accounts for its investment in joint ventures using the equity method when it has significant influence but not control and is not the primary beneficiary of the joint venture. All significant intercompany transactions have been eliminated in consolidation. Note 3— Divestitures Donlen Sale On March 30, 2021, the Company completed the sale of substantially all of the assets and certain liabilities of its Donlen subsidiary. The proceeds from the sale were subject to certain post-closing adjustments in the second quarter of 2021 based on the level of assumed indebtedness, working capital and fleet equity. In the three and six months ended June 30, 2021, the Company recognized a pre-tax gain in its corporate operations of $ 8 million and $ 400 million, net of the impact of foreign currency adjustments, respectively, based on the difference in cash proceeds received of $ 891 million and $ 543 million net book value of assets sold plus a $ 53 million receivable in connection with the sale where cash proceeds were received in September 2021. Note 4— Revenue Earning Vehicles The components of revenue earning vehicles, net are as follows: (In millions) June 30, 2022 December 31, 2021 Revenue earning vehicles $ 13,477 $ 10,506 Less accumulated depreciation ( 1,525 ) ( 1,518 ) 11,952 8,988 Revenue earning vehicles held for sale, net (1) 378 238 Revenue earning vehicles, net $ 12,330 $ 9,226 (1) Represents the carrying amount of vehicles currently placed on the Company's retail lots for sale or actively in the process of being sold through other disposition channels. Depreciation of revenue earning vehicles and lease charges, net includes the following: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Depreciation of revenue earning vehicles $ 432 $ 167 $ 754 $ 432 (Gain) loss on disposal of revenue earning vehicles ( 331 ) ( 60 ) ( 718 ) ( 93 ) Rents paid for vehicles leased 5 9 11 20 Depreciation of revenue earning vehicles and lease charges, net $ 106 $ 116 $ 47 $ 359 16 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Note 5— Debt The Company's debt, including its available credit facilities, consists of the following ($ in millions) as of June 30, 2022 and December 31, 2021: Facility Weighted-Average Interest Rate as of June 30, 2022 Fixed or Floating Interest Rate Maturity June 30, 2022 December 31, 2021 Non-Vehicle Debt Term B Loan 4.33 % Floating 6/2028 $ 1,287 $ 1,294 Term C Loan 4.33 % Floating 6/2028 245 245 Senior Notes Due 2026 4.63 % Fixed 12/2026 500 500 Senior Notes Due 2029 5.00 % Fixed 12/2029 1,000 1,000 First Lien RCF N/A Floating 6/2026 — — Other Non-Vehicle Debt (1) 7.98 % Fixed Various 13 16 Unamortized Debt Issuance Costs and Net (Discount) Premium ( 64 ) ( 69 ) Total Non-Vehicle Debt 2,981 2,986 Vehicle Debt HVF III U.S. ABS Program HVF III U.S. Vehicle Variable Funding Notes HVF III Series 2021-A Class A (2) 2.88 % Floating 6/2024 2,273 2,813 HVF III Series 2021-A Class B (2) 3.65 % Fixed 6/2023 188 188 2,461 3,001 HVF III U.S. Vehicle Medium Term Notes HVF III Series 2021-1 (2) 1.66 % Fixed 12/2024 2,000 2,000 HVF III Series 2021-2 (2) 2.12 % Fixed 12/2026 2,000 2,000 HVF III Series 2022-1 (2) 2.07 % Fixed 6/2025 653 — HVF III Series 2022-2 (2) 2.42 % Fixed 6/2027 653 — HVF III Series 2022-3 (2) 3.53 % Fixed 3/2024 333 — HVF III Series 2022-4 (2) 3.87 % Fixed 9/2025 580 — HVF III Series 2022-5 (2) 4.03 % Fixed 9/2027 317 — 6,536 4,000 Vehicle Debt - Other Repurchase Facility 3.03 % Fixed 7/2022 236 — European ABS (2) 1.80 % Floating 10/2023 510 395 Hertz Canadian Securitization (2) 3.77 % Floating 6/2024 326 191 Australian Securitization (2) 2.74 % Floating 4/2024 140 128 New Zealand RCF 5.12 % Floating 6/2024 37 39 U.K. Financing Facility 4.75 % Floating 7/2022-6/2026 107 98 U.K. Toyota Financing Facility 2.20 % Floating 8/2022-2/2023 27 9 Other Vehicle Debt 2.93 % Floating 7/2022-4/2025 82 93 1,465 953 17 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Facility Weighted-Average Interest Rate as of June 30, 2022 Fixed or Floating Interest Rate Maturity June 30, 2022 December 31, 2021 Unamortized Debt Issuance Costs and Net (Discount) Premium ( 51 ) ( 33 ) Total Vehicle Debt 10,411 7,921 Total Debt $ 13,392 $ 10,907 (1) Other non-vehicle debt is primarily comprised of $ 9 million and $ 12 million in finance lease obligations as of June 30, 2022 and December 31, 2021, respectively. (2) Maturity reference is to the earlier "expected final maturity date" as opposed to the subsequent "legal final maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness originally expect the outstanding principal of the relevant indebtedness to be repaid in full. The legal final maturity date is the date on which the outstanding principal of the relevant indebtedness is legally due and payable in full. Non-vehicle Debt In March 2022, Hertz increased the aggregate committed amount of the First Lien RCF from $ 1.3 billion to $ 1.5 billion and the sublimit for letters of credit from $ 1.1 billion to $ 1.4 billion and amended the First Lien RCF to change the benchmark from USD LIBOR to the Secured Overnight Financing Rate ("SOFR") based rate. In May 2022, Hertz increased the aggregate committed amount of the First Lien RCF from $ 1.5 billion to $ 1.7 billion and the sublimit for letters of credit from $ 1.4 billion to $ 1.6 billion. In June 2022, Hertz increased the aggregate committed amount of the First Lien RCF from $ 1.7 billion to $ 1.9 billion and the sublimit for letters of credit from $ 1.6 billion to $ 1.8 billion. In July 2022, Hertz increased the aggregate committed amount of the First Lien RCF by $ 55 million where the aggregate committed amount remains at $ 1.9 billion and the sublimit for letters of credit by $ 55 million where the aggregate sublimit remains at $ 1.8 billion. Vehicle Debt HVF III U.S. ABS Program HVF III Series 2021-A Notes : In March 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $ 3.0 billion to $ 3.2 billion. In May 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $ 3.2 billion to $ 3.6 billion. In June 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $ 3.6 billion to $ 3.8 billion. Additionally, the maturity date of the Series 2021-A Notes Class A Notes was extended to June 2024. In July 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $ 3.8 billion to $ 3.9 billion. HVF III Series 2022-1 Notes : In January 2022, Hertz issued the Series 2022-1 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 750 million. HVF III Series 2022-2 Notes : In January 2022, Hertz issued the Series 2022-2 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 750 million. 18 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited HVF III Series 2022-3 Notes : In March 2022, Hertz issued the Series 2022-3 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 383 million. HVF III Series 2022-4 Notes : In March 2022, Hertz issued the Series 2022-4 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 667 million. HVF III Series 2022-5 Notes : In March 2022, Hertz issued the Series 2022-5 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 364 million. There is subordination within each of the preceding series based on class. HVF III Various Series 2022 Class D Notes: At the time of the respective HVF III initial offerings disclosed above, Hertz, an affiliate of HVF III, purchased the Class D Notes. Accordingly, the related principal amounts below are eliminated in consolidation as of June 30, 2022. (In millions) Aggregate Principal Amount HVF III Series 2022-1 Class D Notes $ 98 HVF III Series 2022-2 Class D Notes 98 HVF III Series 2022-3 Class D Notes 50 HVF III Series 2022-4 Class D Notes 87 HVF III Series 2022-5 Class D Notes 47 Total $ 380 In July 2022, $ 81 million of the Series 2022-1 and all of the Series 2022-3 Class D Notes were sold by Hertz to third parties. Vehicle Debt-Other Repurchase Facility In June 2022, Hertz entered into a repurchase agreement related to the outstanding HVF III Series 2022 Class D Notes (the "Repurchase Facility"), whereby Hertz may sell the HVF III Series 2022 Class D Notes to the Repurchase Facility counterparty and repurchase such notes from time to time. Transactions occurring under the Repurchase Facility are based on mutually agreeable terms and prevailing rates. As of June 30, 2022, transactions totaling $ 236 million were outstanding under the Repurchase Facility and such transactions bear interest at a rate of SOFR plus 150 basis points and have a 30 -day tenor. Australian Securitization In January 2022, the Australian Securitization was amended to increase the aggregate maximum borrowings to AUD 250 million and to extend the maturity to April 2024. New Zealand RCF In April 2022, Hertz New Zealand Holdings Limited, an indirect, wholly-owned subsidiary of Hertz, amended its credit agreement to extend the maturity to June 2024. U.K. Financing Facility In April 2022, Hertz U.K. Limited amended the U.K. Financing Facility to provide for aggregate maximum borrowings of up to £ 120 million, for a seasonal commitment period through October 2022. Following the expiration of the seasonal commitment period, aggregate maximum borrowings will revert to £ 100 million. Additionally, the U.K. 19 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Financing Facility was amended to extend the maturity of the aggregate maximum borrowings of £ 100 million to October 2023. U.K. Toyota Financing Facility In March 2022, Hertz U.K. Limited amended the U.K. Toyota Financing Facility to increase aggregate maximum borrowings from £ 10 million to £ 25 million and extended the maturity to October 2022. Hertz Canadian Securitization In June 2022, TCL Funding Limited Partnership, a bankruptcy remote, indirect, wholly-owned, special purpose subsidiary of Hertz, amended the Hertz Canadian Securitization to provide for aggregate maximum borrowings of CAD$ 450 million, for a seasonal commitment period through November 2022. Following the expiration of the seasonal commitment period, aggregate maximum borrowings will revert to CAD$ 350 million. Additionally, the Hertz Canadian Securitization was amended to extend the maturity of the aggregate maximum borrowings of CAD$ 350 million to June 2024. Borrowing Capacity and Availability Borrowing capacity and availability comes from the Company's revolving credit facilities, which are a combination of variable funding asset-backed securitization facilities, cash-flow based revolving credit facilities, asset-based revolving credit facilities and the First Lien RCF. Creditors under each such asset-backed securitization facility and asset-based revolving credit facility have a claim on a specific pool of assets as collateral. With respect to each such asset-backed securitization facility and asset-based revolving credit facility, the Company refers to the amount of debt it can borrow given a certain pool of assets as the borrowing base. The Company refers to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the respective facility (i.e., with respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the amount of debt the Company could borrow assuming it possessed sufficient assets as collateral) less the principal amount of debt then-outstanding under such facility and, in the case of the First Lien RCF, less any issued standby letters of credit. With respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the Company refers to "Availability Under Borrowing Base Limitation" as the lower of Remaining Capacity or the borrowing base less the principal amount of debt then-outstanding under such facility (i.e., the amount of debt that can be borrowed given the collateral possessed at such time). 20 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited The following facilities were available to the Company as of June 30, 2022 and are presented net of any outstanding letters of credit: (In millions) Remaining Capacity Availability Under Borrowing Base Limitation Non-Vehicle Debt First Lien RCF $ 1,449 $ 1,449 Total Non-Vehicle Debt 1,449 1,449 Vehicle Debt HVF III Series 2021-A 1,383 — European ABS 279 — Hertz Canadian Securitization 23 — Australian Securitization 33 — U.K. Financing Facility 14 — U.K. Toyota Financing Facility 3 — Total Vehicle Debt 1,735 — Total $ 3,184 $ 1,449 Letters of Credit As of June 30, 2022, there were outstanding standby letters of credit totaling $ 701 million comprised primarily of $ 245 million issued under the term loan "C" facility (the "Term C Loan") and $ 441 million issued under the First Lien RCF. As of June 30, 2022, no capacity remains to issue letters of credit under the Term C Loan. Such letters of credit have been issued primarily to support the Company's insurance programs and to provide credit enhancement for the Company's asset-backed securitization facilities, as well as to support the Company's vehicle rental concessions and leaseholds. As of June 30, 2022, none of the issued letters of credit have been drawn upon. Pledges Related to Vehicle Financing Substantially all of the Company's revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of the lenders under the various credit facilities, other secured financings or asset-backed securities programs. None of the value of such assets (including the assets owned by Hertz Vehicle Financing III LLC and various other domestic and international subsidiaries that facilitate the Company's international securitizations) will be available to satisfy the claims of unsecured creditors unless the secured creditors are paid in full. The Company has a 25 % ownership interest in IFF No. 2, whose sole purpose is to provide commitments to lend under the European ABS in various currencies subject to borrowing bases comprised of revenue earning vehicles and related assets of certain of Hertz International, Ltd.'s subsidiaries. IFF No. 2 is a VIE and the Company is the primary beneficiary; therefore, the assets, liabilities and results of operations of IFF No. 2 are included in the accompanying unaudited condensed consolidated financial statements. As of June 30, 2022 and December 31, 2021, IFF No. 2 had total assets of $ 838 million and $ 734 million, respectively, comprised primarily of intercompany receivables, and total liabilities of $ 837 million and $ 733 million, respectively, comprised primarily of debt. 21 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Covenant Compliance The First Lien RCF credit agreement (the "First Lien Credit Agreement") requires Hertz to comply with the following financial covenant: a First Lien Ratio of less than or equal to 3.00 to 1.00 in the first and last quarters of the calendar year and 3.50 to 1.00 in the second and third quarters of the calendar year. This financial covenant was effective beginning in the third quarter of 2021. As of June 30, 2022, Hertz was in compliance with the First Lien Ratio. In addition to the financial covenant, the First Lien Credit Agreement contains customary affirmative covenants including, among other things, the delivery of quarterly and annual financial statements and compliance certificates, and covenants related to conduct of business, maintenance of property and insurance, compliance with environmental laws and the granting of security interest for the benefit of the secured parties under that agreement on after-acquired real property, fixtures and future subsidiaries. The First Lien Credit Agreement also contains customary negative covenants, including, among other things, restrictions on the incurrence of liens, indebtedness, asset dispositions and restricted payments. As of June 30, 2022, the Company was in compliance with all covenants in the First Lien Credit Agreement. Note 6— Leases The Company enters into certain agreements as a lessor under which it rents vehicles and leases fleets to customers. The following table summarizes the amount of operating lease income and other income included in total revenues in the accompanying unaudited condensed consolidated statements of operations: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Operating lease income from vehicle rentals $ 2,226 $ 1,798 $ 3,947 $ 2,896 Operating lease income from fleet leasing — — — 149 Variable operating lease income 57 39 101 40 Revenue accounted for under Topic 842 2,283 1,837 4,048 3,085 Revenue accounted for under Topic 606 61 36 106 76 Total revenues $ 2,344 $ 1,873 $ 4,154 $ 3,161 Note 7— Income Tax (Provision) Benefit Hertz Global For the three months ended June 30, 2022, Hertz Global recorded a tax provision of $ 179 million which resulted in an effective tax rate of 16 %. For the three months ended June 30, 2021, Hertz Global recorded a tax benefit of $ 46 million, which resulted in an effective tax rate of 22 %. The change in tax in the three months ended June 30, 2022 compared to 2021 is driven by improvements in Hertz Global’s financial performance, as well as the non-taxable change in fair value of the Public Warrants in 2022, non-deductible bankruptcy costs incurred in 2021 and tax benefits associated with the restructuring in Europe recognized in 2021. For the first half of 2022, Hertz Global recorded a tax provision of $ 309 million which resulted in an effective tax rate of 18 %. For the first half of 2021, Hertz Global recorded a tax expense of $ 33 million, which resulted in an effective tax rate of 63 %. The change in tax in the first half of 2022 compared to 2021 is driven by improvements in Hertz Global’s financial performance, as well as the non-taxable change in fair value of the Public Warrants in 2022, non-deductible bankruptcy costs incurred in 2021 and tax benefits associated with the restructuring in Europe recognized in 2021. 22 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited As of June 30, 2022, the Company has approximately $ 670 million gross, or $ 141 million U.S. federal tax effected, of capital loss carryforward relating to a European restructuring for which a full valuation allowance is recorded. The Company filed a request for a pre-filing agreement with the Internal Revenue Service ("IRS") in December 2021, to determine whether the capital loss on the European restructuring qualifies as an ordinary loss. In May of 2022, the IRS began its review of the character of the loss on the European restructuring. A favorable outcome from this proceeding could result in a full or partial release of the valuation allowance. Hertz For the three months ended June 30, 2022, Hertz recorded a tax provision of $ 178 million which resulted in an effective tax rate of 27 %. For the three months ended June 30, 2021, the Company recorded a tax benefit of $ 46 million, which resulted in an effective tax rate of 90 %. The change in tax in the three months ended June 30, 2022 compared to 2021 is driven by improvements in Hertz’s financial performance, as well as non-deductible bankruptcy costs incurred in 2021 and tax benefits associated with the restructuring in Europe recognized in 2021. For the first half of 2022, Hertz recorded a tax provision of $ 308 million which resulted in an effective tax rate of 26 %. For the first half of 2021, the Company recorded a tax provision of $ 33 million, which resulted in an effective tax rate of 15 %. The change in tax in the first half of 2022 compared to 2021 is driven by improvements in Hertz’s financial performance, as well as non-deductible bankruptcy costs incurred in the first half of 2021 and tax benefits associated with the restructuring in Europe recognized in the first half of 2021. As of June 30, 2022, the Company has approximately $ 670 million gross, or $ 141 million U.S. federal tax effected, of capital loss carryforward relating to a European restructuring for which a full valuation allowance is recorded. The Company filed a request for a pre-filing agreement with the Internal Revenue Service ("IRS") in December 2021, to determine whether the capital loss on the European restructuring qualifies as an ordinary loss. In May 2022, the IRS began its review of the character of the loss on the European restructuring. A favorable outcome from this proceeding could result in a full or partial release of the valuation allowance. Note 8— Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global Public Warrants During the three and six months ended June 30, 2022, 44,700 and 189,890 Public Warrants were exercised, respectively, of which 13,223 and 46,650 , respectively, were cashless exercises and 31,477 and 143,240 , respectively, were exercised for $ 13.80 per share. As of June 30, 2022, a cumulative 6,230,170 Public Warrants have been exercised since their original issuance in June 2021. The Public Warrants are recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021. See Note 11, "Fair Value Measurements." Share Repurchase Programs for Common Stock In November 2021, Hertz Global's Board of Directors approved a share repurchase program (the "2021 Share Repurchase Program") that authorized the repurchase of up to $ 2.0 billion worth of shares of Hertz Global's outstanding common stock. Between January 1, 2022 and June 30, 2022, a total of 80,677,021 shares of Hertz Global's common stock were repurchased at an average share price of $ 19.74 for an aggregate purchase price of $ 1.6 billion. During the second quarter of 2022, the Company completed the 2021 Share Repurchase Program. A total of 97,783,047 shares of Hertz Global common stock were repurchased since the inception of this program for an aggregate purchase price of $ 2.0 billion. These amounts are included in treasury stock in the accompanying Hertz Global unaudited condensed consolidated balance sheet as of June 30, 2022. 23 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited In June 2022, Hertz Global's Board of Directors approved a new share repurchase program (the "2022 Share Repurchase Program") that authorized additional repurchases of up to an incremental $ 2.0 billion worth of shares of Hertz Global's outstanding common stock. In June 2022, a total of 1,207,930 shares of Hertz Global's common stock were repurchased under this program at an average share price of $ 16.56 for an aggregate purchase price of $ 20 million. These amounts are included in treasury stock in the accompanying Hertz Global unaudited condensed consolidated balance sheet as of June 30, 2022. Between July 1, 2022 and July 21, 2022, a total of 8,092,200 shares of Hertz Global's common stock were repurchased at an average share price of $ 17.09 for an aggregate purchase price of $ 138 million. A total of 9,300,130 shares of Hertz Global's common stock have been repurchased since the inception of the 2022 Share Repurchase Program for an aggregate purchase price of $ 158 million. Hertz Global funded the share repurchases with available cash and dividend distributions from Hertz. Computation of Earnings (Loss) Per Common Share Basic earnings (loss) per common share has been computed based upon the weighted-average number of common shares outstanding. Diluted earnings (loss) per common share has been computed based upon the weighted-average number of common shares outstanding plus the effect of all potentially dilutive common stock equivalents, including Public Warrants, except when the effect would be anti-dilutive. For the three and six months ended June 30, 2022, the diluted weighted-average shares outstanding included the dilutive impact of Public Warrants where the Company assumed share settlement of the Public Warrants as of the beginning of the reporting period. Additionally, the Company removes the change in fair value of Public Warrants when computing diluted earnings (loss) per common share, when the impact of Public Warrants is dilutive. The following table sets forth the computation of basic and diluted earnings (loss) per common share: Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share data) (1) 2022 2021 2022 2021 Numerator: Net income (loss) attributable and available to Hertz Global common stockholders, basic $ 940 $ ( 168 ) $ 1,366 $ 21 Change in fair value of Public Warrants ( 461 ) — ( 511 ) — Net income (loss) available to Hertz Global common stockholders, diluted $ 479 $ ( 168 ) $ 856 $ 21 Denominator: Basic weighted-average common shares outstanding 398 160 415 158 Dilutive effect of stock options, RSUs and PSUs 1 — 1 — Dilutive effect of Public Warrants 25 — 27 — Diluted weighted-average shares outstanding 424 160 443 158 Antidilutive stock options, RSUs and PSUs 7 1 6 1 Total antidilutive 7 1 6 1 Earnings (loss) per common share: Basic $ 2.36 $ ( 1.05 ) $ 3.29 $ 0.13 Diluted $ 1.13 $ ( 1.05 ) $ 1.93 $ 0.13 (1) The table above is denoted in millions, excluding earnings (loss) per common share. Amounts are calculated from the underlying numbers in thousands, and as a result, may not agree to the amounts shown in the table when calculated in millions. 24 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Note 9— Stock-Based Compensation During the fourth quarter of 2021, Hertz Global's Board of Directors approved the Hertz Global Holdings, Inc. 2021 Omnibus Incentive Plan (the "2021 Omnibus Plan"). As of June 30, 2022, 42,470,050 shares of the Company's common stock are authorized and remain available for future grants under the 2021 Omnibus Plan. Vesting of the outstanding equity awards is also subject to accelerated vesting as set forth in the 2021 Omnibus Plan. During the three and six months ended June 30, 2022, compensation expense of $ 36 million, net of $ 3 million tax benefit, and $ 63 million, net of $ 4 million tax benefit, respectively, was recognized for grants under the 2021 Omnibus Plan and recorded in selling, general and administrative expense in the accompanying unaudited condensed consolidated income statement. As of June 30, 2022, there was $ 287 million of total unrecognized compensation cost expected to be recognized over the remaining 2.2 years, on a weighted average basis, of the requisite service period that began on the grant dates. Stock Options A summary of stock option activity for the first half of 2022 is presented below: Options Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (In millions) Outstanding as of December 31, 2021 3,678,855 $ 26.17 9.9 $ — Granted — — — — Exercised — — — — Forfeited or Expired ( 244,640 ) 26.17 — — Outstanding as of June 30, 2022 3,434,215 — 9.4 — Exercisable as of June 30, 2022 ( 206,440 ) 26.17 9.4 — Non-vested as of June 30, 2022 3,227,775 Performance Stock Units ("PSUs") A summary of the PSU activity for the first half of 2022 is presented below: Shares Weighted- Average Fair Value Aggregate Intrinsic Value (In millions) Outstanding as of December 31, 2021 — $ — $ — Granted 9,928,917 17.73 — Vested — — — Forfeited or Expired ( 19,029 ) 22.02 — Outstanding as of June 30, 2022 9,909,888 17.72 157 25 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Compensation expense for PSUs is based on the grant date fair value. For grants issued in 2022, vesting eligibility is based on market, performance and service conditions of one to five years . Certain of these PSUs were valued on the grant date using a Monte Carlo simulation model that incorporates the assumptions noted in the following table: Grants Assumption 2022 Expected volatility 68 % Expected dividend yield — % Expected term (years) 5 Risk-free interest rate 1.71 % Weighted-average grant date fair value $ 17.61 Restricted Stock and Restricted Stock Units ("RSUs") A summary of RSU activity for the first half of 2022 is presented below: Shares Weighted- Average Fair Value Aggregate Intrinsic Value (In millions) Outstanding as of December 31, 2021 1,726,286 $ 26.17 $ 43 Granted 3,353,698 20.60 — Vested ( 568,812 ) 26.17 — Forfeited or Expired ( 119,604 ) 24.85 — Outstanding as of June 30, 2022 4,391,568 21.95 70 Additional information pertaining to RSU activity is as follows: Six Months Ended June 30, 2022 Total fair value of awards that vested (in millions) $ 15 Weighted-average grant-date fair value of awards granted $ 20.60 RSU grants issued in 2022 vest ratably over a period of two to four years . RSU grants issued in 2021 vest ratably over a period of three years . Deferred Stock Units As of June 30, 2022, there were approximately 48,000 outstanding shares of deferred stock units under the 2021 Omnibus Plan. Note 10— Financial Instruments The Company employs established risk management policies and procedures, and, under the terms of our ABS facilities, may be required to enter into interest rate derivatives, which seek to reduce the Company’s commercial risk exposure to fluctuations in interest rates and currency exchange rates. Although the instruments utilized involve varying degrees of credit, market and interest risk, the Company contracts with multiple counterparties to mitigate concentrations of risk and the counterparties to the agreements are expected to perform fully under the terms of the agreements. The Company monitors counterparty credit risk, including lenders, on a regular basis, but cannot be certain that all risks will be discerned or that its risk management policies and procedures will always be effective. Additionally, upon the occurrence of an event of default under the Company’s International Swaps and Derivatives 26 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Association ("ISDA") master derivative agreements, the non-defaulting party generally has the right, but not the obligation, to set-off any early termination amounts under any such agreements against any other amounts owed with regard to any other agreements between the parties to each such agreement. None of the Company's financial instruments have been designated as hedging instruments as of June 30, 2022 and December 31, 2021. Interest Rate Risk The Company uses a combination of interest rate caps and swaps to manage its exposure to interest rate movements and to manage its mix of floating and fixed-rate debt. Currency Exchange Rate Risk The Company uses foreign currency exchange rate derivative financial instruments to manage its currency exposure resulting from intercompany transactions and other cross currency obligations. Fair Value The following table summarizes the estimated fair value of financial instruments: Fair Value of Financial Instruments Asset Derivatives (1) Liability Derivatives (1) (In millions) June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 Interest rate instruments $ 99 $ 12 $ — $ — Foreign currency forward contracts 2 1 6 2 Total $ 101 $ 13 $ 6 $ 2 (1) All asset derivatives are recorded in prepaid expenses and other assets and all liability derivatives are recorded in accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. During the three and six months ended June 30, 2022, the Company recognized gains of $ 21 million and $ 65 million, respectively, on interest rate instruments which were recorded in vehicle interest expense, net in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2022. The amounts recognized in income for derivative instruments were no t material for the three and six months ended June 30, 2021. The Company's foreign currency forward contracts and certain interest rate instruments are subject to enforceable master netting agreements with their counterparties. The Company does not offset such derivative assets and liabilities in its unaudited condensed consolidated balance sheets, and the potential effect of the Company’s use of the master netting arrangements is not material. Note 11— Fair Value Measurements Under U.S. GAAP, entities are allowed to measure certain financial instruments and other items at fair value. The Company has not elected the fair value measurement option for any of its assets or liabilities that meet the criteria for this option. Irrespective of the fair value option previously described, U.S. GAAP requires certain financial and non-financial assets and liabilities of the Company to be measured on either a recurring basis or on a nonrecurring basis. 27 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Fair Value Disclosures The fair value of cash, restricted cash, accounts receivable, accounts payable and accrued liabilities, to the extent the underlying liability will be settled in cash, approximates the carrying values because of the short-term nature of these instruments. Debt Obligations The fair value of the debt facilities is estimated based on quoted market rates as well as borrowing rates currently available to the Company for loans with similar terms and average maturities (i.e. Level 2 inputs). June 30, 2022 December 31, 2021 (In millions) Nominal Unpaid Principal Balance Aggregate Fair Value Nominal Unpaid Principal Balance Aggregate Fair Value Non-Vehicle Debt $ 3,045 $ 2,642 $ 3,055 $ 3,065 Vehicle Debt 10,462 9,939 7,954 7,908 Total $ 13,507 $ 12,581 $ 11,009 $ 10,973 Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes the Company's cash equivalents, restricted cash equivalents and Public Warrants that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy as follows: June 30, 2022 December 31, 2021 (In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Cash equivalents and restricted cash equivalents $ 794 $ — $ — $ 794 $ 1,678 $ — $ — $ 1,678 Liabilities: Public Warrants $ 811 $ — $ — $ 811 $ 1,324 $ — $ — $ 1,324 Cash Equival ents and Restricted Cash Equivalents The Company’s cash equivalents and restricted cash equivalents primarily consist of investments in money market funds and bank money market and interest-bearing accounts. The Company determines the fair value of cash equivalents and restricted cash equivalents using a market approach based on quoted prices in active markets (i.e. Level 1 inputs). Public Warrants Hertz Global's Public Warrants are classified as liabilities and recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity . See Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global," for additional information. The Company calculates the fair value based on the end-of-day quoted market price, a Level 1 input of the fair value hierarchy. For the three and six months ended June 30, 2022, the fair value adjustments were gains of $ 461 million and $ 511 million, respectively, and are recorded in change in fair value of Public Warrants in the accompanying unaudited condensed consolidated statements of operations for Hertz Global for the three and six months ended June 30, 2022. 28 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Financial Instruments The fair value of the Company's financial instruments as of June 30, 2022 and December 31, 2021 are disclosed in Note 10, "Financial Instruments." The Company's financial instruments are classified as Level 2 assets and liabilities and are priced using quoted market prices for similar assets or liabilities in active markets. Note 12— Contingencies and Off-Balance Sheet Commitments Legal Proceedings Self-Insured Liabilities The Company is currently a defendant in numerous actions and has received numerous claims on which actions have not yet commenced for self-insured liabilities arising from the operation of motor vehicles rented from the Company. The obligation for self-insured liabilities on self-insured U.S. and international vehicles, as stated in the accompanying unaudited condensed consolidated balance sheets, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet reported. The related liabilities are recorded on an undiscounted basis and are based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. As of June 30, 2022 and December 31, 2021, the Company's liability recorded for self-insured liabilities is $ 470 million and $ 463 million, respectively. The Company believes that its analysis is based on the most relevant information available, combined with reasonable assumptions. The liability is subject to significant uncertainties. The adequacy of the liability is regularly monitored based on evolving accident claim history and insurance related legislation changes. If the Company's estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results. Loss Contingencies From time to time the Company is a party to various legal proceedings, typically involving operational issues common to the vehicle rental business. The Company has summarized below the material legal proceedings to which the Company was a party during the three and six months ended June 30, 2022 or the period after June 30, 2022, but before the filing of this Quarterly Report. Make-Whole and Post-Petition Interest Claims - On July 1, 2021, Wells Fargo Bank, N.A., in its capacity as indenture trustee of (1) 6.250 % Unsecured Notes due 2022 (the "2022 Notes"), (2) 5.500 % Unsecured Notes due 2024 (the "2024 Notes"), (3) 7.125 % Unsecured Notes due 2026 (the "2026 Notes"), and (4) 6.000 % Unsecured Notes due 2028 (the "2028 Notes") issued by The Hertz Corporation (collectively, the “Notes”), filed a complaint (the “Complaint”) against The Hertz Corporation and multiple direct and indirect subsidiaries thereof (collectively referred to in this summary as “Defendants”). The filing of the Complaint initiated the adversary proceeding captioned Wells Fargo Bank, National Association v. The Hertz Corporation, et al. pending in the United States Bankruptcy Court for the District of Delaware, Adv. Pro. No. 21-50995 (MFW). The Complaint seeks a declaratory judgment that the holders of the Unsecured Notes are entitled to payment of certain redemption premiums and post-petition interest that they assert total $ 271,684,720 plus interest at the contractual default rate or, in the alternative, are entitled to payment of post-petition interest at a contractual rate that they assert totals $ 124,512,653 plus interest. On August 2, 2021, the Defendants filed a motion to dismiss Wells Fargo's claims. On December 22, 2021, the Bankruptcy Court dismissed Wells Fargo’s claims with respect to (i) the redemption premium allegedly owed on the 2022 and 2024 Notes and (ii) post-petition interest at the contract rate. Wells Fargo’s claims for a redemption premium with respect to the 2026 and 2028 Senior Notes remain. Note holders that elected to participate in the rights offering held in June 2021 (the "2021 Rights Offering") waived their right to collect on the redemption premium. Therefore, since some of the 2026 and 2028 note holders elected to participate in the 2021 Rights Offering, the total amount which may be owed with respect to the asserted redemption premium for those series of notes will be reduced. On February 25, 2022, the Defendants answered the Complaint. The parties intend to submit cross-motions for summary judgment and have agreed to a schedule with respect to those motions. The Defendants intend to 29 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited vigorously defend against the claims in this matter. The Company cannot predict the outcome or timing of this litigation. Claims Relating to Alleged False Arrests - As a large company, we are subject to various proceedings, lawsuits, disputes, inquiries, and claims arising in the ordinary course of our business. One series of claims involves claimants seeking monetary damages from the Company in the Bankruptcy Court and Delaware Superior Court in connection with allegations that police detained or arrested them in error after the Company reported their rental cars as stolen. These claims arise from actions allegedly taken by the Company prior to emergence from its bankruptcy reorganization. The overwhelming majority of these cases involve vehicles that were not returned to the Company within a reasonable time period following their contracted return date. These claims have been the subject of press coverage and the Company has received inquiries on the matter from certain elected officials. The Company will continue to defend itself as appropriate and has established policies to help ensure proper treatment of its customers as well as to prosecute those involved in the theft of services or assets of the Company. The Company has made settlement offers to certain claimants, and may continue to do so from time to time in the future. We currently believe that the eventual outcome of these claims will not have a materially adverse effect on the Company’s business, financial condition, results of operations or cash flows. In addition, in May 2022, the Company filed a complaint against several of its insurers seeking a determination of its rights under its commercial general liability, and directors and officers liability, insurance policies for these alleged claims in a declaratory judgment action pending in Delaware Superior Court, captioned Hertz Global Holdings, Inc. et al. v. ACE American Insurance Co. et al., C.A. No. N22C-05-130 MMJ (CCLD). The Company has established reserves for matters where the Company believes that losses are probable and can be reasonably estimated. Other than the aggregate reserve established for claims for self-insured liabilities, none of those reserves are material. For matters where the Company has not established a reserve, the ultimate outcome or resolution cannot be predicted at this time, or the amount of ultimate loss, if any, cannot be reasonably estimated. These matters are subject to many uncertainties and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings could be decided unfavorably to the Company or any of its subsidiaries involved. Accordingly, it is possible that an adverse outcome from such a proceeding could exceed the amount accrued in an amount that could be material to the Company's consolidated financial condition, results of operations or cash flows in any particular reporting period. Other Proceedings Litigation Against Former Executives - The Company filed litigation in the U.S. District Court for the District of New Jersey against former executives Mark Frissora, Elyse Douglas and John Jefferey Zimmerman on March 25, 2019, and in state court in Florida against former executive Scott Sider on March 28, 2019. The complaints predominantly allege breach of contract and seek repayment of incentive-based compensation received by the defendants in connection with restatements included in the former Hertz Global Holdings, Inc. ("Old Hertz Holdings") Form 10-K for the year ended December 31, 2014 and related accounting for prior periods. The Company is also seeking recovery for the costs of an SEC investigation that resulted in an administrative order on December 31, 2018 with respect to events generally involving the restatements included in Old Hertz Holdings Form 10-K for the year ended December 31, 2014 and other damages resulting from the necessity of the restatements. The Company is pursuing these legal proceedings in accordance with its clawback policy and contractual rights. In October 2019, the Company entered into a confidential Settlement Agreement with Elyse Douglas. In September and October 2020, the judge in the New Jersey action entered orders requiring the remaining parties and applicable insurers to attend and participate in mediation. The attorneys in the Florida action voluntarily agreed to participate in the same mediation which was held on November 30, 2020. The mediation was unsuccessful, but settlement discussions continued and, on April 14, 2021, the Bankruptcy Court approved a Settlement Agreement between the Company and Scott Sider. The Florida action is now closed. On December 29, 2021, the Company entered into a settlement agreement with Jeff Zimmerman, leaving Mark Frissora as the sole remaining defendant in this litigation. Fact and expert discovery have now been completed in the New Jersey action with competing dispositive motions due by September 30, 2022. Pursuant to the agreements governing the separation of Herc Holdings Inc. from Hertz Global 30 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited that occurred on June 30, 2016, Herc Holdings Inc. is entitled to 15 % of the net proceeds of any repayment or recovery from these cases. Indemnification Obligations In the ordinary course of business, the Company has executed contracts involving indemnification obligations customary in the rental car industry and indemnifications specific to a transaction such as the sale of a business. These indemnification obligations might include claims relating to the following: environmental matters; intellectual property rights; governmental regulations and employment-related matters; customer, supplier and other commercial contractual relationships and financial matters. Specifically, the Company has indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which the Company may be held responsible could be substantial. In addition, Hertz entered into customary indemnification agreements with Hertz Holdings and certain of the Company's stockholders and their affiliates pursuant to which Hertz Holdings and Hertz will indemnify those entities and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of such entities and certain other claims and liabilities, including liabilities arising out of financing arrangements or securities offerings. The Company has entered into customary indemnification agreements with each of its directors and certain of its officers. Performance under these indemnification obligations would generally be triggered by a breach of terms of the contract or by a third-party claim. In connection with the separation of the rental car business from the equipment rental business in 2016, the Company executed an agreement with Herc Holdings Inc. that contains mutual indemnification clauses and a customary indemnification provision with respect to liability arising out of or resulting from assumed legal matters. The Company regularly evaluates the probability of having to incur costs associated with these indemnification obligations and has accrued for expected losses that are probable and estimable. Note 13— Related Party Transactions Transactions and Agreements between Hertz Holdings and Hertz In May 2021, upon expiration of a loan originated in May 2020 between Hertz Holdings and Hertz, Hertz entered into a new master loan agreement with Hertz Holdings for a facility size of $ 25 million with an expiration in May 2022 (the "2021 Master Loan"). The interest rate was based on the U.S. Dollar LIBOR rate plus a margin. The 2021 Master Loan expired according to its terms and accordingly, as of June 30, 2022, there is no outstanding balance under the 2021 Master Loan. 767 Auto Leasing LLC In January 2018, Hertz entered into a Master Motor Vehicle Lease and Management Agreement (the “767 Lease Agreement”) pursuant to which Hertz granted 767 Auto Leasing LLC (“767”), an entity affiliated with a related party until May 2020, the option to acquire certain vehicles from Hertz. During the three and six months ended June 30, 2021, 767 distributed $ 5 million and $ 15 million, respectively, to American Entertainment Properties Corp. along with the return of certain vehicles. The 767 Lease Agreement was terminated effective October 31, 2021. Prior to the termination of the 767 Lease Agreement, the Company determined that it was the primary beneficiary of 767 due to its power to direct the activities of 767 that most significantly impacted 767's economic performance and the Company's obligation to absorb 25 % of 767's gains/losses and, accordingly, 767 was consolidated by the Company as a VIE. Note 14— Segment Information The Company’s chief operating decision maker ("CODM") assesses performance and allocates resources based upon the financial information for the Company’s reportable segments. The Company has identified two reportable 31 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited segments, which are consistent with its operating segments and organized based on the products and services provided and the geographic areas in which business is conducted, as follows: • Americas RAC – rental of vehicles (cars, crossovers, vans and light trucks), as well as sales of value-added services, in the U.S., Canada, Latin America and the Caribbean; and • International RAC – rental and leasing of vehicles (cars, crossovers, vans and light trucks), as well as sales of value-added services internationally and consists primarily of the Company's Europe and other international locations. In the second quarter of 2021, as a result of the Donlen Sale, as disclosed in Note 3, "Divestitures," the All Other Operations reportable segment, which consisted primarily of the Company's former Donlen business, was no longer deemed a reportable segment. In addition to its reportable segments and other operating activities, the Company has corporate operations ("Corporate") which includes general corporate assets and expenses and certain interest expense (including net interest on non-vehicle debt). Corporate includes other items necessary to reconcile the reportable segments to the Company's total amounts. The following tables provide significant statement of operations and balance sheet information by reportable segment for each of Hertz Global and Hertz, as well as Adjusted EBITDA, the measure used to determine segment profitability. Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Revenues Americas RAC $ 1,973 $ 1,643 $ 3,531 $ 2,610 International RAC 371 230 623 415 Total reportable segments 2,344 1,873 4,154 3,025 All other operations (1) — — — 136 Total Hertz Global and Hertz $ 2,344 $ 1,873 $ 4,154 $ 3,161 Depreciation of revenue earning vehicles and lease charges, net Americas RAC $ 61 $ 80 $ ( 32 ) $ 290 International RAC 45 36 79 69 Total Hertz Global and Hertz $ 106 $ 116 $ 47 $ 359 Adjusted EBITDA Americas RAC $ 770 $ 664 $ 1,411 $ 690 International RAC 92 ( 1 ) 119 ( 9 ) Total reportable segments 862 663 1,530 681 All other operations (1) — — — 13 Corporate ( 98 ) ( 24 ) ( 152 ) ( 52 ) Total Hertz Global and Hertz $ 764 $ 639 $ 1,378 $ 642 (1) Substantially comprised of the Company's Donlen business, which was sold on March 30, 2021 as disclosed in Note 3, "Divestitures." 32 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited As of (In millions) June 30, 2022 December 31, 2021 Revenue earning vehicles, net Americas RAC $ 10,728 $ 7,897 International RAC 1,602 1,329 Total Hertz Global and Hertz $ 12,330 $ 9,226 Total assets Americas RAC $ 17,197 $ 14,352 International RAC 3,245 2,978 Total reportable segments 20,442 17,330 Corporate 1,624 2,453 Total Hertz Global (1) 22,066 19,783 Corporate - Hertz ( 1 ) ( 3 ) Total Hertz (1) $ 22,065 $ 19,780 (1) The consolidated total assets of Hertz Global and Hertz as of June 30, 2022 and December 31, 2021 include total assets of VIEs of $ 838 million and $ 734 million, respectively, which can only be used to settle obligations of the VIEs. See "Pledges Related to Vehicle Financing" in Note 5, "Debt," for further information. Reconciliations of Adjusted EBITDA by reportable segment to consolidated amounts are summarized below: Hertz Global Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Adjusted EBITDA: Americas RAC $ 770 $ 664 $ 1,411 $ 690 International RAC 92 ( 1 ) 119 ( 9 ) Total reportable segments 862 663 1,530 681 All other operations (1) — — — 13 Corporate (2) ( 98 ) ( 24 ) ( 152 ) ( 52 ) Total Hertz Global 764 639 1,378 642 Adjustments: Non-vehicle depreciation and amortization ( 36 ) ( 50 ) ( 69 ) ( 104 ) Non-vehicle debt interest, net (3) ( 41 ) ( 91 ) ( 80 ) ( 135 ) Vehicle debt-related charges (4) ( 9 ) ( 26 ) ( 16 ) ( 54 ) Restructuring and restructuring related charges (5) ( 15 ) ( 37 ) ( 21 ) ( 50 ) Reorganization items, net (6) — ( 633 ) — ( 677 ) Pre-reorganization charges and non-debtor financing charges (7) — ( 17 ) — ( 40 ) Gain from the Donlen Sale (8) — 8 — 400 Change in fair value of Public Warrants (9) 461 — 511 — Unrealized gains (losses) on financial instruments (10) 21 — 65 — Other items (11) ( 26 ) ( 8 ) ( 93 ) 70 Income (loss) before income taxes $ 1,119 $ ( 215 ) $ 1,675 $ 52 33 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited Hertz Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Adjusted EBITDA: Americas RAC $ 770 $ 664 $ 1,411 $ 690 International RAC 92 ( 1 ) 119 ( 9 ) Total reportable segments 862 663 1,530 681 All other operations (1) — — — 13 Corporate (2) ( 98 ) ( 24 ) ( 152 ) ( 52 ) Total Hertz 764 639 1,378 642 Adjustments: Non-vehicle depreciation and amortization ( 36 ) ( 50 ) ( 69 ) ( 104 ) Non-vehicle debt interest, net (3) ( 41 ) ( 91 ) ( 80 ) ( 135 ) Vehicle debt-related charges (4) ( 9 ) ( 26 ) ( 16 ) ( 54 ) Restructuring and restructuring related charges (5) ( 15 ) ( 37 ) ( 21 ) ( 50 ) Reorganization items, net (6) — ( 469 ) — ( 513 ) Pre-reorganization charges and non-debtor financing charges (7) — ( 17 ) — ( 40 ) Gain from the Donlen Sale (8) — 8 — 400 Unrealized gains (losses) on financial instruments (10) 21 — 65 — Other items (11) ( 26 ) ( 8 ) ( 93 ) 70 Income (loss) before income taxes $ 658 $ ( 51 ) $ 1,164 $ 216 (1) Substantially comprised of the Company's Donlen business, which was sold on March 30, 2021 as disclosed in Note 3, "Divestitures." (2) Represents other reconciling items primarily consisting of general corporate expenses, non-vehicle interest expense, as well as other business activities. (3) In 2021, includes $ 8 million of loss on extinguishment of debt associated with the payoff and termination of the HIL Credit Agreement resulting from the implementation of the Plan of Reorganization. (4) Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums. (5) Represents charges incurred under restructuring actions as defined in U.S. GAAP. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. (6) Represents charges incurred associated with the filing of and the emergence from the Chapter 11 Cases, as disclosed in Note 15, "Reorganization Items, Net." (7) Represents charges incurred prior to the filing of the Chapter 11 Cases which are comprised of preparation charges for the reorganization, such as professional fees. Also, includes certain non-debtor financing and professional fee charges. (8) Represents the net gain from the sale of the Company's Donlen business on March 30, 2021, as disclosed in Note 3, "Divestitures." (9) Represents the change in fair value during the reporting period for the Company's outstanding Public Warrants. (10) Represents unrealized gains (losses) on derivative financial instruments. See Note 10, "Financial Instruments." (11) Represents miscellaneous items. For the three and six months ended June 30, 2022, primarily includes bankruptcy claims, certain professional fees and charges related to the settlement of bankruptcy claims and certain non-cash stock-based compensation charges. For the three and six months ended June 30, 2021, includes $ 100 million associated with the suspension of depreciation during the first quarter for the Donlen business while classified as held for sale, partially offset by letter of credit fees recorded in the first half of the year and charges for a multiemployer pension plan withdrawal liability recorded in the first quarter. Note 15— Reorganization Items, Net The Debtors incurred incremental costs as a result of the Chapter 11 Cases and settlement of liabilities under the Plan of Reorganization which were recorded as reorganization items, net in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021. 34 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Unaudited The following tables summarize reorganization items, net: Hertz Global (In millions) Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Professional fees and other bankruptcy related costs $ 199 $ 257 Loss on extinguishment of debt (1) 191 191 Backstop fee 164 164 Breakup fee (2) 77 77 Contract settlements 25 25 Cancellation of share-based compensation grants (3) ( 10 ) ( 10 ) Net gain on settlement of liabilities subject to compromise ( 11 ) ( 22 ) Other, net ( 2 ) ( 5 ) Reorganization items, net $ 633 $ 677 Hertz (In millions) Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Professional fees and other bankruptcy related costs $ 199 $ 257 Loss on extinguishment of debt (1) 191 191 Breakup fee (2) 77 77 Contract settlements 25 25 Cancellation of share-based compensation grants (3) ( 10 ) ( 10 ) Net gain on settlement of liabilities subject to compromise ( 11 ) ( 22 ) Other, net ( 2 ) ( 5 ) Reorganization items, net $ 469 $ 513 (1) Includes loss on extinguishment of debt resulting from the implementation of the Plan of Reorganization. Primarily composed of write offs of unamortized deferred loan origination costs and early termination fees associated with terminated debt agreements. (2) Breakup fee paid to prior plan sponsors and certain of their respective affiliates and certain holders of the senior notes upon emergence from Chapter 11 in accordance with an equity purchase and commitment agreement entered into on April 3, 2021, which was subsequently terminated. (3) On June 30, 2021, in accordance with the Plan of Reorganization, all outstanding equity awards under the then-existing incentive plan (the "Omnibus Plan") were cancelled without any distribution and the Omnibus Plan was deemed to be cancelled. As a result of the equity awards cancellations, the Company recognized $ 10 million related to the unrecognized portion of share-based compensation in reorganization expense in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021. As of December 31, 2021, $ 25 million was recorded in accounts payable in the accompanying unaudited condensed consolidated balance sheet, which was paid through the claim settlement process during the first half of 2022. Cash payments during the first half of 2021 were $ 480 million. 35 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Hertz Global Holdings, Inc. (together with its consolidated subsidiaries and variable interest entities, "Hertz Global") is a holding company and its principal, wholly-owned subsidiary is The Hertz Corporation (together with its consolidated subsidiaries and variable interest entities, "Hertz"). Hertz Global consolidates Hertz for financial statement purposes, and Hertz comprises approximately the entire balance of Hertz Global’s assets, liabilities and operating cash flows. In addition, Hertz’s operating revenues and operating expenses comprise nearly 100% of Hertz Global’s revenues and operating expenses. As such, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") that follows herein is for Hertz and also applies to Hertz Global in all material respects, unless otherwise noted. Differences between the operations and results of Hertz and Hertz Global are separately disclosed and explained. We sometimes use the words “we,” “our,” “us,” and the “Company” in this MD&A for disclosures that relate to all of Hertz and Hertz Global. The statements in this MD&A regarding industry outlook, our expectations regarding the performance of our business and the other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. The following MD&A provides information that we believe to be relevant to an understanding of our consolidated financial condition and results of operations. This MD&A should be read in conjunction with the MD&A presented in our 2021 Form 10-K together with the sections entitled “Cautionary Note Regarding Forward-Looking Statements,” Part II, Item 1A, "Risk Factors,” and our unaudited condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 (this "Quarterly Report"), which include additional information about our accounting policies, practices and the transactions underlying our financial results. The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in our unaudited condensed consolidated financial statements and the accompanying notes including revenue earning vehicle depreciation and various claims and contingencies related to lawsuits, taxes and other matters arising during the normal course of business. We apply our best judgment, our knowledge of existing facts and circumstances and our knowledge of actions that we may undertake in the future in determining the estimates that will affect our unaudited condensed consolidated financial statements. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe to be appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision, actual results may differ from these estimates. In this MD&A we refer to the following non-GAAP measure and key metrics: • Adjusted Corporate EBITDA – important non-GAAP measure to management because it allows management to assess the operational performance of our business, exclusive of certain items, and allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows investors to assess our operational performance on the same basis that management uses internally. Adjusted EBITDA, the segment measure of profitability and accordingly a GAAP measure, is calculated exclusive of certain items which are largely consistent with those used in the calculation of Adjusted Corporate EBITDA. • Vehicle Utilization – Effective in the first quarter of 2022, in connection with the appointment of the new CEO (who serves as our Chief Operating Decision Maker) and arising from significantly increased activity in vehicle dispositions, we began using Average Rentable Vehicles in the denominator in our calculation of Vehicle Utilization. Vehicle Utilization is calculated by dividing total Transaction Days by Available Car Days. Available Car Days represents Average Rentable Vehicles multiplied by the number of days in a given period. Average Rentable Vehicles excludes vehicles for sale on our retail lots or actively in the process of being sold through other disposition channels. We believe this is a better measure of the productivity of our rental fleet as it is unaffected by fluctuations in disposition activity. Accordingly, prior periods have been restated to conform with the revised definition. 36 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) • Depreciation Per Unit Per Month – important key metric to management and investors as depreciation of revenue earning vehicles and lease charges is one of our largest expenses for the vehicle rental business and is driven by the number of vehicles, expected residual values at the expected time of disposal and expected hold period of the vehicles. Depreciation Per Unit Per Month is reflective of how we are managing the costs of our vehicles and facilitates a comparison with other participants in the vehicle rental industry. • Total Revenue Per Transaction Day ("Total RPD," also referred to as "pricing") – important key metric to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control. Effective in the third quarter of 2021, we revised our calculation of Total RPD to include ancillary retail vehicle sales revenues to better align with current industry practice, and accordingly, prior periods have been restated to conform with the revised definition. • Total Revenue Per Unit Per Month ("Total RPU") – important key metric to management and investors as it provides a measure of revenue productivity relative to the number of vehicles in our rental fleet whether owned or leased ("Average Rentable Vehicles"). Effective in the third quarter of 2021, we revised our calculation of Total RPU to include ancillary retail vehicle sales revenues to better align with current industry practice and effective in the first quarter of 2022, we revised to use Average Rentable Vehicles as the denominator in our calculation of Total RPU. Average Rentable Vehicles excludes vehicles for sale on the Company’s retail lots or actively in the process of being sold through other disposition channels. We believe this is a better measure of the productivity of our rental fleet as it is unaffected by fluctuations in disposition activity. There has been no change to revenue as used in the numerator of the calculation which includes vehicle rental and rental related revenues, licensee revenue and ancillary retail vehicle sales revenue. Prior periods have been restated to conform with the revised definition. • Transaction Days – important key metric to management and investors as it represents the number of revenue generating days ("volume"). It is used as a component to measure Total RPD and Vehicle Utilization. Transaction Days represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period. Our non-GAAP measure and key metrics should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S. GAAP. The above non-GAAP measure and key metrics are defined, and the non-GAAP measure is reconciled to its most comparable U.S. GAAP measure, in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A. OUR COMPANY Hertz Holdings was incorporated in Delaware in 2015 to serve as the top-level holding company for Rental Car Intermediate Holdings, LLC, which wholly owns Hertz, Hertz Global's primary operating company. Hertz was incorporated in Delaware in 1967 and is a successor to corporations that have been engaged in the vehicle rental and leasing business since 1918. We operate our vehicle rental business globally from company-owned, licensee and franchisee locations in North America, Europe, Latin America, Africa, Asia, Australia, the Caribbean, the Middle East and New Zealand. We also sell vehicles through Hertz Car Sales and operate the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets. Previously, in addition to vehicle rental, we provided integrated vehicle leasing and fleet management solutions through our Donlen subsidiary, which was sold on March 30, 2021. 37 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) OVERVIEW OF OUR BUSINESS AND OPERATING ENVIRONMENT Impact of COVID-19 on our Business Environment In March 2020, the World Health Organization declared COVID-19 a pandemic, affecting multiple global regions. In an effort to halt the spread of COVID-19, many governments around the world placed significant restrictions on travel. Beginning in the second half of 2021, and continuing into 2022, many government-imposed restrictions have been lifted or eased, and travel, particularly domestic leisure travel, has experienced a strong rebound. However, there remains continued uncertainty about the duration of the COVID-19 pandemic and its variants, including the impact of the continuing global semiconductor microchip manufacturing shortage (the "Chip Shortage") and other supply chain constraints. Voluntary Petitions for Bankruptcy and Emergence On May 22, 2020, the Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Court. On June 10, 2021, the Plan of Reorganization was confirmed by the Bankruptcy Court and on June 30, 2021, the Plan of Reorganization became effective and the Debtors emerged from Chapter 11. Our Business We are engaged principally in the business of renting vehicles primarily through our Hertz, Dollar and Thrifty brands. Our profitability is primarily a function of the volume, mix and pricing of rental transactions and the utilization of vehicles, the related ownership cost of vehicles and other operating costs. Significant changes in the purchase price or residual values of vehicles or interest rates can have a significant effect on our profitability depending on our ability to adjust pricing for these changes. We continue to balance our mix of non-program and program vehicles based on market conditions, including residual values. Our business requires significant expenditures for vehicles, and as such, we require substantial liquidity to finance such expenditures. Our strategy is focused on excellence in execution of our rental operations, electrification of the fleet, shared mobility, connected cars and exiting vehicles from the fleet directly to consumers. Our revenues are primarily derived from rental and related charges and consist of worldwide vehicle rental revenues from all company-operated vehicle rental operations and charges to customers for the reimbursement of costs incurred relating to airport concession fees and vehicle license fees, the fueling of vehicles and revenues associated with value-added services, including the sale of loss or collision damage waivers, theft protection, liability and personal accident/effects insurance coverage, premium emergency roadside service and other products and fees. Also included are ancillary revenues associated with retail vehicle sales and certain royalty fees from our franchisees (such fees are less than 2% of total revenues each period). Our expenses primarily consist of: • Direct vehicle and operating expense ("DOE"), primarily wages and related benefits; commissions and concession fees paid to airport authorities, travel agents and others; facility, self-insurance and reservation costs; and other costs relating to the operation and rental of revenue earning vehicles, such as damage, maintenance and fuel costs; • Depreciation expense and lease charges, net relating to revenue earning vehicles, including gains and losses and related costs associated with the disposal of vehicles; • Depreciation and amortization expense relating to non-vehicle assets; • Selling, general and administrative expense ("SG&A"), which includes advertising costs and administrative personnel costs, along with costs for information technology and finance transformation programs; and • Interest expense, net. Our vehicle rental operations are a seasonal business, with decreased levels of business in the winter months and heightened activity during the spring and summer months ("our peak season") for the majority of countries where 38 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) we generate our revenues. To accommodate increased demand, we increase our available fleet and staff. As demand declines, fleet and staff are decreased accordingly. A number of our other major operating costs, including airport concession fees, commissions and vehicle liability expenses, are directly related to revenues or transaction volumes. We also maintain a flexible workforce, with a significant number of part-time and seasonal workers. Certain operating expenses, including real estate taxes, rent, insurance, utilities, maintenance and other facility-related expenses, and minimum staffing costs, remain fixed and cannot be adjusted for demand. Our Reportable Segments We have identified two reportable segments, which are consistent with our operating segments and organized based on the products and services provided and the geographic areas in which business is conducted, as follows: • Americas RAC – Rental of vehicles, as well as sales of value-added services, in the U.S., Canada, Latin America and the Caribbean; and • International RAC – Rental and leasing of vehicles, as well as sales of value-added services, internationally and consists primarily of our Europe and other international locations. In the second quarter of 2021, as a result of the Donlen Sale, the All Other Operations reportable segment, which was primarily comprised of the Donlen business, was no longer deemed to be a reportable segment. In addition to the above reportable segments, we have corporate operations. We assess performance and allocate resources based upon the financial information for our operating segments. Three Months Ended June 30, 2022 Operating Overview Effective in the first quarter of 2022, we began using Average Rentable Vehicles in the denominator in our calculation of Vehicle Utilization and Total RPU. Average Rentable Vehicles excludes vehicles for sale on our retail lots or actively in the process of being sold through other disposition channels. We believe this is a better measure of the productivity of our rental fleet as it is unaffected by fluctuations in disposition activity. Accordingly, prior periods have been restated to reflect this change. Effective during the third quarter of 2021, we changed our definition of Total RPD and Total RPU to include ancillary retail sales revenues to better align with current industry practice, and accordingly, prior periods have been restated to conform with the revised definitions. The following charts provide the period-over-period change for several key factors influencing our results for the three and six months ended June 30, 2022 and 2021. 39 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) (1) Includes impact of foreign currency exchange at average rates ("fx"). (2) Results shown are in constant currency as of December 31, 2021. (3) The percentages shown in this chart reflect Vehicle Utilization versus period-over-period change. For more information on the above, see the discussion of our results on a consolidated basis and by segment that follows herein. In this MD&A, certain amounts in the following tables are denoted as in millions. Amounts such as percentages are calculated from the underlying numbers in thousands, and as a result, may not agree to the amount when calculated from the tables in millions. 40 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CONSOLIDATED RESULTS OF OPERATIONS – HERTZ Three Months Ended June 30, Percent Increase/(Decrease) Six Months Ended June 30, Percent Increase/(Decrease) ($ In millions) 2022 2021 2022 2021 Total revenues $ 2,344 $ 1,873 25% $ 4,154 $ 3,161 31% Direct vehicle and operating expenses 1,199 946 27 2,252 1,724 31 Depreciation of revenue earning vehicles and lease charges, net 106 116 (9) 47 359 (87) Non-vehicle depreciation and amortization 36 50 (28) 69 104 (34) Selling, general and administrative expenses 257 172 50 492 321 53 Interest expense, net: Vehicle 45 98 (54) 50 202 (75) Non-vehicle 41 91 (55) 80 135 (40) Interest expense, net 86 189 (55) 130 337 (62) Other (income) expense, net 2 (10) NM — (13) NM Reorganization items, net — 469 (100) — 513 (100) (Gain) from the sale of a business — (8) (100) — (400) (100) Income (loss) before income taxes 658 (51) NM 1,164 216 NM Income tax (provision) benefit (178) 46 NM (308) (33) NM Net income (loss) 480 (5) NM 856 183 NM Net (income) loss attributable to noncontrolling interests — 1 (100) — 2 (100) Net income (loss) attributable to Hertz $ 480 $ (4) NM $ 856 $ 185 NM Adjusted Corporate EBITDA (a) $ 764 $ 639 19 $ 1,378 $ 642 NM The footnote in the table above is shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A. NM - Not meaningful Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021 Total revenues increased $471 million in the second quarter of 2022 compared to 2021 due primarily to increased travel demand. Total revenues increased $331 million and $141 million in our Americas RAC and International RAC segments, respectively. Excluding an unfavorable $3 million fx impact, Americas RAC revenues increased $334 million due primarily to higher volume and pricing. Excluding an unfavorable $41 million fx impact, revenues for our International RAC segment increased $182 million due primarily to higher pricing and volume. DOE increased $252 million in the second quarter of 2022 compared to 2021 due primarily to an increase of $209 million and $43 million in our Americas RAC and International RAC segments, respectively. DOE in our Americas RAC segment increased due primarily to higher personnel costs as well as fleet-related costs driven by increased travel demand and fleet age. Excluding an unfavorable $23 million fx impact, DOE in our International RAC segment increased $66 million due primarily to higher volume driven by increased travel demand. Depreciation of revenue earning vehicles and lease charges, net decreased $10 million in the second quarter of 2022 compared to 2021 due primarily to a decrease of $20 million in our Americas RAC segment, partly offset by an increase of $9 million in our International RAC segment. The decrease in our Americas RAC segment was due primarily to strength in residual values and an increase in gains recognized on the disposition of vehicles. Excluding an unfavorable $5 million fx impact, depreciation increased $15 million in our International RAC segment due in part to increased fleet size resulting from longer vehicle holding periods. 41 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) SG&A increased $85 million in the second quarter of 2022 compared to 2021 due primarily to non-cash stock-based compensation costs and professional fees in our corporate operations, increased advertising spend in our Americas RAC and International RAC segments, partly offset by decreased bankruptcy-related charges in our corporation operations. Vehicle interest expense, net decreased $53 million in the second quarter of 2022 compared to 2021 due primarily to lower average rates from the issuance of HVF III ABS Notes and the payoff and termination of HVF II debt in accordance with the Plan of Reorganization in 2021, as well as $21 million of gains on interest rate caps on the HVF III ABS Notes primarily in our Americas RAC segment. Non-vehicle interest expense, net decreased $50 million in the second quarter of 2022 compared to 2021 due primarily to lower average interest rates partially offset by higher debt levels. We had other income of $10 million in the second quarter of 2021 due in part to the gain on the sales of certain franchises in our Americas RAC segment. In the second quarter of 2021, we incurred $469 million of net reorganization charges, primarily in our corporate operations, which was comprised primarily of professional fees associated with the Chapter 11 Cases, the loss on extinguishment of certain debt resulting from the implementation of the Plan of Reorganization, a prior plan sponsor breakup fee and other miscellaneous charges related to the implementation of the Plan of Reorganization. For the three months ended June 30, 2022, we recorded a tax provision of $178 million which resulted in an effective tax rate of 27%. For the three months ended June 30, 2021, we recorded a tax benefit of $46 million, which resulted in an effective tax rate of 90%. The change in tax in the three months ended June 30, 2022 compared to 2021 is driven by improvements in our financial performance, as well as non-deductible bankruptcy costs incurred in 2021 and tax benefits associated with the restructuring in Europe recognized in 2021. Six months ended June 30, 2022 Compared with Six months ended June 30, 2021 Total revenues increased $993 million in the first half of 2022 compared to 2021 due primarily to an increase of $921 million and $207 million in our Americas RAC and International RAC segments, respectively, partially offset by a decrease of $136 million in All other operations. Excluding an unfavorable $3 million fx impact, revenues for our Americas RAC segment increased $924 million due primarily to higher volume and pricing. Excluding an unfavorable $58 million fx impact, revenues for our International RAC segment increased $265 million resulting from higher pricing and volume. All other operations decreased due to the Donlen Sale in the first quarter of 2021. DOE increased $528 million in the first half of 2022 compared to 2021 due primarily to an increase of $471 million and $69 million in our Americas RAC and International RAC segments, respectively, partially offset by a decrease of $8 million in our corporate operations. The increase in Americas RAC DOE was due primarily to higher personnel costs as well as fleet-related costs driven by increased travel demand and fleet age. Excluding an unfavorable $33 million fx impact DOE for International RAC increased $102 million due to higher volume driven by increased travel demand. The decrease in our corporate operations was due primarily to lower personnel costs. Depreciation of revenue earning vehicles and lease charges decreased $312 million in the first half of 2022 compared to 2021 due to a decrease of $321 million in our Americas RAC segment, partly offset by an increase of $9 million in our International RAC segment. The decrease in our Americas RAC segment is due primarily to strength in residual values and an increase in gains recognized on the disposition of vehicles. Excluding an unfavorable $8 million impact of fx, depreciation of revenue earning vehicles and lease charges for our International RAC segment increased $17 million due primarily to increased fleet size due in part to longer vehicle holding periods resulting from new vehicle production constraints due to the Chip Shortage, partially offset by strength in residual values. 42 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) SG&A increased $171 million in the first half of 2022 compared to 2021 due primarily to non-cash stock-based compensation costs and bankruptcy claims in our corporate operations, increased advertising spend in our Americas RAC and International RAC segments and increased facility costs in our International RAC segment, partially offset by lower personnel costs in our International RAC segment. Vehicle interest expense, net decreased $152 million in the first half of 2022 compared to 2021 due primarily to lower average rates from the issuance of HVF III ABS Notes and the payoff and termination of HVF II debt in accordance with the Plan of Reorganization in 2021, as well as $65 million of gains on interest rate caps on the HVF III ABS Notes primarily in our Americas RAC segment. Non-vehicle interest expense, net decreased $54 million in the first half of 2022 compared to 2021 due primarily to lower average interest rates partially offset by higher debt levels. We had other income of $13 million in the first half of 2021 due in part to the gain on the sales of certain franchises in our Americas RAC segment. We incurred $513 million of net reorganization charges in the first half of 2021, primarily in our corporate operations, which was comprised primarily of professional fees associated with the Chapter 11 Cases, the loss on extinguishment of certain debt resulting from the implementation of the Plan of Reorganization, a prior plan sponsor breakup fee and other miscellaneous charges related to the implementation of the Plan of Reorganization. For the first half of 2022, we recorded a tax provision of $308 million which resulted in an effective tax rate of 26%. For the first half of 2021, we recorded a tax provision of $33 million, which resulted in an effective tax rate of 15%. The change in tax in the first half of 2022 compared to 2021 is driven by improvements in our financial performance, as well as non-deductible bankruptcy costs incurred in the first half of 2021 and tax benefits associated with the restructuring in Europe recognized in the first half of 2021. CONSOLIDATED RESULTS OF OPERATIONS – HERTZ GLOBAL The above discussion for Hertz also applies to Hertz Global. Hertz Global had $461 million and $511 million of income from the change in fair value of Public Warrants that was incremental to Hertz for the second quarter and first half of 2022, respectively, included in Hertz Global's unaudited condensed consolidated statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. Hertz Global had $164 million of reorganization items, net for the second quarter and first half of 2021, respectively, that was incremental to the amounts shown for Hertz. These amounts represent certain effects from the implementation of the Plan of Reorganization included in Hertz Global's unaudited condensed consolidated statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. 43 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS AND SELECTED OPERATING DATA BY SEGMENT Americas RAC Three Months Ended June 30, Percent Increase/(Decrease) Six Months Ended June 30, Percent Increase/(Decrease) ($ In millions, except as noted) 2022 2021 2022 2021 Total revenues $ 1,973 $ 1,643 20% $ 3,531 $ 2,610 35% Depreciation of revenue earning vehicles and lease charges, net $ 61 $ 80 (24) $ (32) $ 290 NM Direct vehicle and operating expenses $ 1,002 $ 793 26 $ 1,905 $ 1,434 33 Direct vehicle and operating expenses as a percentage of total revenues 51 % 48 % 54 % 55 % Non-vehicle depreciation and amortization $ 30 $ 43 (31) $ 56 $ 87 (36) Selling, general and administrative expenses $ 99 $ 69 42 $ 185 $ 121 53 Selling, general and administrative expenses as a percentage of total revenues 5 % 4 % 5 % 5 % Vehicle interest expense $ 35 $ 77 (55) $ 37 $ 149 (75) Reorganization items, net $ — $ 94 (100) $ — $ 80 (100) Adjusted EBITDA $ 770 $ 664 16 $ 1,411 $ 690 NM Transaction Days (in thousands) (b) 29,160 24,992 17 54,739 45,243 21 Average Vehicles (in whole units) (f) 422,113 350,122 21 409,867 325,364 26 Average Rentable Vehicles (in whole units) (c) 399,588 344,150 16 386,363 320,232 21 Vehicle Utilization (c) 80 % 80 % 78 % 78 % Total RPD (in dollars) (d) $ 67.67 $ 65.70 3 $ 64.50 $ 57.67 12 Total RPU Per Month (in whole dollars) (e) $ 1,646 $ 1,590 4 $ 1,523 $ 1,358 12 Depreciation Per Unit Per Month (in whole dollars) (f) $ 49 $ 77 (36) $ (13) $ 149 NM Percentage of program vehicles as of period end 1 % 5 % 1 % 5 % Footnotes to the table above are shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A. NM - Not meaningful Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021 Total Americas RAC revenues increased $331 million in the second quarter of 2022 compared to 2021 due primarily to higher volume and pricing. Excluding an unfavorable $3 million fx impact, revenues increased $334 million. The increase in Transaction Days was driven by volume increases across most leisure categories due to increased travel demand. The increase in Total RPD was due primarily to higher pricing across the industry resulting from increased travel demand and industry-wide constraints on vehicles due to the Chip Shortage continuing to affect new vehicle production during the second quarter of 2022. Airport revenues comprised 72% of total revenues for the segment in the second quarter of 2022 compared to 71% the second quarter of 2021. Depreciation of revenue earning vehicles and lease charges, net for Americas RAC decreased $20 million in the second quarter of 2022 compared to 2021. Depreciation Per Unit Per Month decreased to $49 in the second quarter of 2022 compared to $77 in the second quarter of 2021 due primarily to strength in residual values and an increase in gains recognized on the disposition of vehicles. Average Vehicles increased in the second quarter of 2022 compared to 2021 due to increased travel demand. 44 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) DOE for Americas RAC increased $209 million in the second quarter of 2022 compared to 2021 due primarily to higher personnel costs as well as fleet-related costs driven by the increased travel demand discussed above and fleet age. SG&A for Americas RAC increased $29 million in the second quarter of 2022 compared to 2021 due primarily to increased advertising spend. Vehicle interest expense for Americas RAC decreased $42 million in the second quarter of 2022 compared to 2021 due to $20 million of net gains on interest rate caps on the HVF III ABS Notes and a decrease resulting from lower average rates resulting from the issuance of the HVF III ABS Notes and the full repayment and termination of the HVF II ABS Notes in accordance with the Plan of Reorganization in 2021. In the second quarter of 2021, Americas RAC incurred $94 million of net reorganization charges primarily related to the loss on extinguishment of certain vehicle debt resulting from the implementation of the Plan of Reorganization and certain contract-related charges. Six months ended June 30, 2022 Compared with Six months ended June 30, 2021 Total Americas RAC revenues increased $921 million in the first half of 2022 compared to 2021 due primarily to higher volume and pricing. Excluding an unfavorable $3 million fx impact, revenues increased $924 million. The increase in Transaction Days was driven primarily by volume increases in most leisure categories as travel demand increased. The increase in Total RPD was driven primarily by higher pricing across the industry due to growth in travel demand and industry-wide constraints on vehicles due to the Chip Shortage affecting new vehicle production. Airport revenues comprised 72% of total revenues for the segment in the first half of 2022 as compared to 68% in the first half of 2021, due primarily to the lifting of air travel restrictions. Depreciation of revenue earning vehicles and lease charges for Americas RAC decreased $321 million in the first half of 2022 compared to 2021. Depreciation Per Unit Per Month in the first half of 2022 changed to a negative expense of $13 compared to an expense of $149 in the first half of 2021, due primarily to strength in residual values and an increase in gains recognized on the disposition of vehicles. Average Vehicles increased due to increased travel demand. DOE for Americas RAC increased $471 million in the first half of 2022 compared to 2021 due primarily to higher personnel costs as well as fleet-related costs driven by the increased travel demand discussed above and fleet age. SG&A for Americas RAC increased $64 million in the first half of 2022 compared to the first half of 2021, due primarily to increased advertising spend. Vehicle interest expense for Americas RAC decreased $111 million in the first half of 2022 compared to 2021 due primarily to $60 million of gains on interest rate caps on the HVF III ABS Notes and lower debt levels resulting from vehicle dispositions associated with the Chapter 11 Cases and lower average rates resulting from the issuance of the HVF III ABS Notes and the full repayment and termination of the HVF II ABS Notes in accordance with the Plan of Reorganization. In the first half of 2021, Americas RAC incurred $80 million of net reorganization charges primarily related to the loss on extinguishment of certain vehicle debt resulting from the implementation of the Plan of Reorganization and certain contract-related charges in the first half of 2021. 45 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) International RAC Three Months Ended June 30, Percent Increase/(Decrease) Six Months Ended June 30, Percent Increase/(Decrease) ($ in millions, except as noted) 2022 2021 2022 2021 Total revenues $ 371 $ 230 61% $ 623 $ 415 50% Depreciation of revenue earning vehicles and lease charges, net $ 45 $ 36 26 $ 79 $ 69 14 Direct vehicle and operating expenses $ 197 $ 154 28 $ 348 $ 279 25 Direct vehicle and operating expenses as a percentage of total revenues 53 % 67 % 56 % 67 % Non-vehicle depreciation and amortization $ 4 $ 4 9 $ 7 $ 9 (22) Selling, general and administrative expenses $ 47 $ 40 20 $ 89 $ 70 27 Selling, general and administrative expenses as a percentage of total revenues 13 % 17 % 14 % 17 % Vehicle interest expense $ 10 $ 21 (52) $ 13 $ 41 (69) Reorganization items, net $ — $ 12 (100) $ — $ 12 (100) Adjusted EBITDA $ 92 $ (1) NM $ 119 $ (9) NM Transaction Days (in thousands) (b) 6,284 4,893 28 11,326 9,291 22 Average Vehicles (in whole units) (f) 91,194 71,044 28 87,392 69,019 27 Average Rentable Vehicles (in whole units) (c) 90,648 69,807 30 86,508 67,478 28 Vehicle Utilization (c) 76 % 77 % 72 % 76 % Total RPD (in dollars) (d) $ 61.96 $ 44.45 39 $ 56.82 $ 42.31 34 Total RPU Per Month (in whole dollars) (e) $ 1,432 $ 1,039 38 $ 1,240 $ 971 28 Depreciation Per Unit Per Month (in whole dollars) (f) $ 172 $ 160 7 $ 156 $ 158 (2) Percentage of program vehicles as of period end 31 % 36 % 31 % 36 % Footnotes to the table above are shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A. NM - Not meaningful Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021 Total revenues for International RAC increased $141 million in the second quarter of 2022 compared to 2021 due to higher pricing and volume. Excluding an unfavorable $41 million fx impact, revenues increased $182 million due primarily to higher pricing across the industry resulting from growth in travel demand and industry-wide constraints on vehicle supply due to the Chip Shortage affecting new vehicle production. The increase in Transaction Days was driven by higher volume primarily in Europe due to increased travel demand. Depreciation of revenue earning vehicles and lease charges, net for International RAC increased $9 million in the second quarter of 2022 compared to 2021. Excluding an unfavorable $5 million fx impact, depreciation increased $15 million. Average Vehicles for International RAC increased due in part to fleet purchasing constraints in 2021 and longer vehicle holding periods resulting from new vehicle production constraints due to the Chip Shortage. Depreciation Per Unit Per Month for International RAC increased to $172 for the second quarter of 2022 compared to $160 for the second quarter of 2021 period due in part to increase in per unit costs of current year fleet, partly offset by strength in residual values. 46 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) DOE for International RAC increased $43 million in the second quarter of 2022 compared to 2021. Excluding an unfavorable $23 million fx impact, DOE increased $66 million due primarily to higher volume driven by the increased travel demand discussed above. SG&A for International RAC increased $8 million in the second quarter of 2022 compared 2021. Excluding an unfavorable $5 million fx impact, SG&A increased $13 million due primarily to increased advertising spend. Vehicle interest expense for International RAC decreased $11 million in the second quarter of 2022 compared to 2021 due primarily to lower debt levels and gains on interest rate caps. In the second quarter of 2021, International RAC incurred $12 million of net reorganization charges primarily related to advisory fees related to debt refinancings and the loss on extinguishment of the European Vehicle Notes resulting from the implementation of the Plan of Reorganization. Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021 Total revenues for International RAC increased $207 million in the first half of 2022 compared to 2021 due primarily to higher pricing and volume. Total RPD increased 34% driven primarily by higher pricing across the industry due to industry-wide constraints on vehicle supply due to the Chip Shortage affecting new vehicle production. Transaction Days increased 22% driven primarily by higher volume in most leisure and business categories due to easing of government-imposed travel restrictions. Excluding an unfavorable $58 million fx impact, revenues increased $265 million. Depreciation of revenue earning vehicles and lease charges for International RAC increased $9 million in the first half of 2022 compared to 2021. Excluding an unfavorable $8 million fx impact, depreciation increased $17 million. Average Vehicles for International RAC increased due in part to fleet purchasing constraints in 2021 and longer vehicle holding periods resulting from new vehicle production constraints due to the Chip Shortage. Depreciation Per Unit Per Month for International RAC decreased to $156 in the first half of 2022 compared to $158 in the first half of 2021 due to strength in residual values. DOE for International RAC increased $69 million in the first half of 2022 compared to 2021. Excluding an unfavorable $33 million fx impact, DOE increased $102 million due primarily to higher volume driven by increased travel demand. SG&A for International RAC increased $19 million in the first half of 2022 compared to 2021. Excluding an unfavorable $8 million fx impact, SG&A increased $27 million due primarily to increased facility costs and advertising spend, partially offset by lower personnel costs. Vehicle interest expense for International RAC decreased $28 million in the first half of 2022 compared to 2021 due primarily to lower debt levels and gains on interest rate caps. In the first half of 2021, International RAC incurred $12 million of net reorganization charges primarily related primarily to advisory fees related to debt refinancings and the loss on extinguishment of the European Vehicle Notes resulting from the implementation of the Plan of Reorganization during the first half of 2021. Footnotes to the Results of Operations and Selected Operating Data by Segment Tables (a) Adjusted Corporate EBITDA is calculated as net income (loss) attributable to Hertz or Hertz Global, adjusted for income taxes; non-vehicle depreciation and amortization; non-vehicle debt interest, net; vehicle debt-related charges; restructuring and restructuring related charges; information technology and finance transformation costs; reorganization items, net; pre-reorganization items and non-debtor financing charges; gain from the sale of a business; unrealized (gains) losses from financial instruments and certain other miscellaneous items. When evaluating our operating performance, investors should not consider Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of our financial performance 47 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) determined in accordance with U.S. GAAP. The reconciliations to the most comparable consolidated U.S. GAAP measure are presented below: Hertz Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Net income (loss) attributable to Hertz $ 480 $ (4) $ 856 $ 185 Adjustments: Income tax provision (benefit) 178 (46) 308 33 Non-vehicle depreciation and amortization 36 50 69 104 Non-vehicle debt interest, net (1) 41 91 80 135 Vehicle debt-related charges (2) 9 26 16 54 Restructuring and restructuring related charges (3) 15 37 21 50 Reorganization items, net (4) — 469 — 513 Pre-reorganization and non-debtor financing charges (5) — 17 — 40 Gain from the Donlen Sale (6) — (8) — (400) Unrealized (gains) losses on financial instruments (7) (21) — (65) — Other items (8) 26 7 93 (72) Adjusted Corporate EBITDA $ 764 $ 639 $ 1,378 $ 642 Hertz Global Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Net income (loss) attributable to Hertz Global $ 940 $ (168) $ 1,366 $ 21 Adjustments: Income tax provision (benefit) 179 (46) 309 33 Non-vehicle depreciation and amortization 36 50 69 104 Non-vehicle debt interest, net (1) 41 91 80 135 Vehicle debt-related charges (2) 9 26 16 54 Restructuring and restructuring related charges (3) 15 37 21 50 Reorganization items, net (4) — 633 — 677 Pre-reorganization and non-debtor financing charges (5) — 17 — 40 Gain from the Donlen Sale (6) — (8) — (400) Unrealized (gains) losses on financial instruments (7) (21) — (65) — Change in fair value of Public Warrants (9) (461) — (511) — Other items (8) 26 7 93 (72) Adjusted Corporate EBITDA $ 764 $ 639 $ 1,378 $ 642 (1) In 2021, includes $8 million of loss on extinguishment of debt associated with the payoff and termination of the HIL Credit Agreement resulting from the implementation of the Plan of Reorganization. (2) Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums. (3) Represents charges incurred under restructuring actions as defined in U.S. GAAP. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. (4) Represents charges incurred associated with the filing of and the emergence from the Chapter 11 Cases, as disclosed in Note 15, "Reorganization Items, Net," in Part I, Item 1 of this Quarterly Report. (5) Represents charges incurred prior to the filing of the Chapter 11 Cases which are comprised of preparation charges for the reorganization, such as professional fees. Also, includes certain non-debtor financing and professional fee charges. (6) Represents the net gain from the sale of our Donlen business on March 30, 2021 as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report. 48 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) (7) Represents unrealized (gains) losses on derivative financial instruments. See Note 10, "Financial Instruments," in Part I, Item 1 of this Quarterly Report. (8) Represents miscellaneous items. For 2022, primarily includes bankruptcy claims, certain professional fees and charges related to the settlement of bankruptcy claims and certain non-cash stock-based compensation charges. For 2021, includes $100 million associated with the suspension of depreciation during the first quarter for the Donlen business while classified as held for sale, partially offset by letter of credit fees recorded in the first half of the year and charges for a multiemployer pension plan withdrawal liability recorded in the first quarter. (9) Represents the change in fair value during the reporting period for Hertz Global's outstanding Public Warrants. (b) Transaction Days represents the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period. (c) Average Rentable Vehicles excludes vehicles for sale on our retail lots or actively in the process of being sold through other disposition channels and determined using a simple average of such vehicles at the beginning and end of a given period. Effective in the first quarter of 2022, as discussed above, we revised our calculation of Vehicle Utilization to use Average Rentable Vehicles in the denominator. Accordingly, prior periods have been restated to conform with the revised definition. Vehicle Utilization is calculated by dividing total Transaction Days by Available Car Days. Americas RAC International RAC Three Months Ended June 30, 2022 2021 2022 2021 Transaction Days (in thousands) 29,160 24,992 6,284 4,893 Average Rentable Vehicles (in whole units) 399,588 344,150 90,648 69,807 Number of days in period (in whole units) 91 91 91 91 Available Car Days (in thousands) 36,366 31,319 8,248 6,352 Vehicle Utilization 80 % 80 % 76 % 77 % Americas RAC International RAC Six Months Ended June 30, 2022 2021 2022 2021 Transaction Days (in thousands) 54,739 45,243 11,326 9,291 Average Rentable Vehicles (in whole units) 386,363 320,232 86,508 67,478 Number of days in period (in whole units) 181 181 181 181 Available Car Days (in thousands) 69,952 58,000 15,664 12,216 Vehicle Utilization 78 % 78 % 72 % 76 % (d) Total RPD is calculated as revenues with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates ("Total Revenues - adjusted for foreign currency"), divided by the total number of Transaction Days. As discussed above, effective in the third quarter of 2021, we revised our calculation of Total RPD to include ancillary retail vehicle sales revenues, and accordingly, prior periods have been restated to conform with the revised definition. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. The calculation of Total RPD is shown below: Americas RAC International RAC Three Months Ended June 30, ($ in millions, except as noted) 2022 2021 2022 2021 Revenues $ 1,973 $ 1,643 $ 371 $ 230 Foreign currency adjustment (1) — (1) 18 (12) Total Revenues - adjusted for foreign currency $ 1,973 $ 1,642 $ 389 $ 218 Transaction Days (in thousands) 29,160 24,992 6,284 4,893 Total RPD (in dollars) $ 67.67 $ 65.70 $ 61.96 $ 44.45 49 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Americas RAC International RAC Six Months Ended June 30, ($ in millions, except as noted) 2022 2021 2022 2021 Revenues $ 3,531 $ 2,610 $ 623 $ 415 Foreign currency adjustment (1) — (1) 21 (22) Total Revenues - adjusted for foreign currency $ 3,531 $ 2,609 $ 644 $ 393 Transaction Days (in thousands) 54,739 45,243 11,326 9,291 Total RPD (in whole dollars) $ 64.50 $ 57.67 $ 56.82 $ 42.31 (1) Based on December 31, 2021 foreign currency exchange rates for all periods presented. (e) Total RPU Per Month is calculated as Total Revenues - adjusted for foreign currency divided by the Average Rentable Vehicles in each period and then divided by the number of months in the period reported. As discussed above, effective in the third quarter 2021, we revised our calculation of Total RPU to include ancillary retail vehicle sales revenues and effective in the first quarter of 2022, we revised our calculation of Total RPU to use Average Rentable Vehicles as the denominator. Accordingly, prior periods have been restated to conform with the revised definition. Americas RAC International RAC Three Months Ended June 30, ($ in millions, except as noted) 2022 2021 2022 2021 Total Revenues - adjusted for foreign currency $ 1,973 $ 1,642 $ 389 $ 218 Average Rentable Vehicles (in whole units) 399,588 344,150 90,648 69,807 Total revenue per unit (in whole dollars) $ 4,938 $ 4,771 $ 4,295 $ 3,116 Number of months in period (in whole units) 3 3 3 3 Total RPU Per Month (in whole dollars) $ 1,646 $ 1,590 $ 1,432 $ 1,039 Americas RAC International RAC Six Months Ended June 30, ($ in millions, except as noted) 2022 2021 2022 2021 Total Rental Revenues $ 3,531 $ 2,609 $ 644 $ 393 Average Rentable Vehicles (in whole units) 386,363 320,232 86,508 67,478 Total revenue per unit (in whole dollars) $ 9,139 $ 8,147 $ 7,440 $ 5,825 Number of months in period (in whole units) 6 6 6 6 Total RPU Per Month (in whole dollars) $ 1,523 $ 1,358 $ 1,240 $ 971 50 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) (f) Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges, per vehicle per month and is calculated as depreciation of revenue earning vehicles and lease charges, net, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates, divided by the Average Vehicles in each period, which is determined using a simple average of the number of vehicles at the beginning and end of a period, and then dividing by the number of months in the period reported. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. The calculation of Depreciation Per Unit Per Month is shown below: Americas RAC International RAC Three Months Ended June 30, ($ in millions, except as noted) 2022 2021 2022 2021 Depreciation of revenue earning vehicles and lease charges, net $ 61 $ 80 $ 45 $ 36 Foreign currency adjustment (1) — 1 3 (2) Adjusted depreciation of revenue earning vehicles and lease charges $ 61 $ 81 $ 48 $ 34 Average Vehicles (in whole units) 422,113 350,122 91,194 71,044 Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars) $ 145 $ 231 $ 526 $ 480 Number of months in period (in whole units) 3 3 3 3 Depreciation Per Unit Per Month (in whole dollars) $ 49 $ 77 $ 172 $ 160 Americas RAC International RAC Six Months Ended June 30, ($ in millions, except as noted) 2022 2021 2022 2021 Depreciation of revenue earning vehicles and lease charges, net $ (32) $ 290 $ 79 $ 69 Foreign currency adjustment (1) — 1 3 (4) Adjusted depreciation of revenue earning vehicles and lease charges $ (32) $ 291 $ 82 $ 65 Average Vehicles (in whole units) 409,867 325,364 87,392 69,019 Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars) $ (78) $ 894 $ 934 $ 948 Number of months in period (in whole units) 6 6 6 6 Depreciation Per Unit Per Month (in whole dollars) $ (13) $ 149 $ 156 $ 158 (1) Based on December 31, 2021 foreign currency exchange rates for all periods presented. LIQUIDITY AND CAPITAL RESOURCES Our U.S. and international operations are funded by cash provided by operating activities and by extensive financing arrangements, both debt and equity, maintained by us in the U.S. and internationally. Cash and Cash Equivalents As of June 30, 2022, we had $1.0 billion of cash and cash equivalents and $522 million of restricted cash and cash equivalents. As of June 30, 2022, $321 million of cash and cash equivalents and $91 million of restricted cash and cash equivalents were held by our subsidiaries outside of the U.S. We do not assert permanent reinvestment with respect to our non-U.S. earnings, and if not in the form of loan repayments or subject to favorable tax treaties, repatriation of some of these funds under current regulatory and tax law for use in domestic operations could expose us to additional cash taxes. We believe that cash and cash equivalents generated by our operations and cash received on the disposal of vehicles, together with amounts available under various liquidity facilities and refinancing options available to us in the capital markets, will be sufficient to fund our operating activities and obligations for the next twelve months. 51 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Cash Flows - Hertz As of June 30, 2022 and December 31, 2021, Hertz had cash and cash equivalents of $1.0 billion and $2.3 billion, respectively, and restricted cash and cash equivalents of $522 million and $393 million, respectively. The following table summarizes the net change in cash and cash equivalents and restricted cash and cash equivalents for the periods shown: Six Months Ended June 30, (In millions) 2022 2021 $ Change Cash provided by (used in): Operating activities $ 1,330 $ 465 $ 865 Investing activities (3,251) (2,316) (935) Financing activities 859 3,004 (2,145) Effect of exchange rate changes (25) (8) (17) Net change in cash and cash equivalents and restricted cash and cash equivalents $ (1,087) $ 1,145 $ (2,232) During the first half of 2022, cash flows from operating activities increased by $865 million period over period due primarily to a $758 million change in net income attributable to Hertz, as adjusted for non-cash and non-operating items, and a $107 million change in working capital accounts. Cash flows from working capital accounts increased due primarily to the reduction of reorganization items and professional fees and the elimination of certain expense prepayment requirements while in Chapter 11, partially offset by the payment of bankruptcy claims in 2022 that had been previously deferred and subject to compromise while in Chapter 11 in 2021. Our primary investing activities relate to the acquisition and disposal of revenue earning vehicles. During the first half of 2022, there was a $935 million increase in the cash used in investing activities period over period due primarily to $818 million of net proceeds received from the Donlen Sale in 2021 with no comparable in the 2022 period and a $265 million net increase in cash expenditures primarily resulting from the acquisition of vehicles to meet increased travel demand, partially offset by $208 million related to cash collateral payments, net of returns, for certain outstanding letters of credit upon emergence from bankruptcy in 2021. Net financing cash inflows were $859 million in the first half of 2022 compared to cash inflows of $3.0 billion in the 2021 period. The $2.1 billion decrease in cash inflows was due in part to a $5.6 billion contribution from Hertz Holdings in 2021 with no comparable in 2022, $1.6 billion of dividends paid to Hertz Holdings to fund share repurchases in 2022, partially offset by $4.9 billion of net proceeds primarily related to the issuance of new vehicle debt in 2022. 52 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Cash Flows - Hertz Global As of June 30, 2022 and December 31, 2021, Hertz Global had cash and cash equivalents of $1.0 billion and $2.3 billion, respectively, and restricted cash and cash equivalents of $522 million and $393 million, respectively. The following table summarizes the net change in cash and cash equivalents and restricted cash and cash equivalents for the periods shown: Six Months Ended June 30, (In millions) 2022 2021 $ Change Cash provided by (used in): Operating activities $ 1,329 $ 465 $ 864 Investing activities (3,251) (2,316) (935) Financing activities 859 2,976 (2,117) Effect of exchange rate changes (25) (8) (17) Net change in cash and cash equivalents and restricted cash and cash equivalents $ (1,088) $ 1,117 $ (2,205) Fluctuations in operating, investing and financing cash flows from period to period were due to the same factors as those disclosed for Hertz above, with the exception of cash inflows or outflows related to the repurchase of our common stock and the exercise of Public Warrants as disclosed in Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global," in Part I, Item 1 of this Quarterly Report. Equity Financing Share Repurchase Programs for Common Stock In November 2021, Hertz Global's Board of Directors approved the 2021 Share Repurchase Program that authorized the repurchase of up to $2.0 billion worth of shares of Hertz Global's outstanding common stock. Between January 1, 2022 and June 30, 2022, a total of 80,677,021 shares of Hertz Global's common stock were repurchased at an average share price of $19.74 for an aggregate purchase price of $1.6 billion. During the second quarter of 2022, the Company completed the 2021 Share Repurchase Program. A total of 97,783,047 shares of Hertz Global common stock were repurchased since the inception of this program for an aggregate purchase price of $2.0 billion. These amounts are included in treasury stock in the accompanying Hertz Global unaudited condensed consolidated balance sheet as of June 30, 2022. In June 2022, Hertz Global's Board of Directors approved the 2022 Share Repurchase Program that authorized additional repurchases of up to an incremental $2.0 billion worth of shares of Hertz Global's outstanding common stock. In June 2022, a total of 1,207,930 shares of Hertz Global's common stock were repurchased under this program at an average share price of $16.56 for an aggregate purchase price of $20 million. These amounts are included in treasury stock in the accompanying Hertz Global unaudited condensed consolidated balance sheet as of June 30, 2022. Between July 1, 2022 and July 21, 2022, a total of 8,092,200 shares of Hertz Global's common stock were repurchased at an average share price of $17.09 for an aggregate purchase price of $138 million. A total of 9,300,130 shares of Hertz Global's common stock have been repurchased since the inception of the 2022 Share Repurchase Program for an aggregate purchase price of $158 million. Hertz Global funded the share repurchases with available cash and dividend distributions from Hertz. 53 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Debt Financing Vehicle Debt Financing In January 2022, HVF III Series 2022-1 Notes were issued in an aggregate principal amount of $750 million. Hertz purchased the Class D Notes, and as a result approximately $98 million of the aggregate principal amount is eliminated in consolidation. In July 2022, $81 million of the Series 2022-1 Class D Notes were sold to a third party. In January 2022, HVF III Series 2022-2 Notes were issued in an aggregate principal amount of $750 million. Hertz purchased the Class D Notes, and as a result approximately $98 million of the aggregate principal amount is eliminated in consolidation. In January 2022, the Australian Securitization was amended to increase the aggregate maximum borrowings to AUD250 million and to extend the maturity to April 2024. In March 2022, HVF III Series 2022-3 Notes were issued in an aggregate principal amount of $383 million. Hertz purchased the Class D Notes, and as a result approximately $50 million of the aggregate principal amount is eliminated in consolidation. In July 2022, all of the Series 2022-3 Class D Notes were sold to a third party. In March 2022, HVF III Series 2022-4 Notes were issued in an aggregate principal amount of $667 million. Hertz purchased the Class D Notes, and as a result approximately $87 million of the aggregate principal amount is eliminated in consolidation. In March 2022, HVF III Series 2022-5 Notes were issued in an aggregate principal amount of $364 million. Hertz purchased the Class D Notes, and as a result approximately $47 million of the aggregate principal amount is eliminated in consolidation. In March 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $3.0 billion to $3.2 billion. In March 2022, Hertz U.K. Limited amended the U.K. Toyota Financing Facility to increase aggregate maximum borrowings from £10 million to £25 million and extended the maturity to October 2022. In April 2022, Hertz New Zealand Holdings Limited, an indirect, wholly-owned subsidiary of Hertz, amended its credit agreement to extend the maturity to June 2024. In April 2022, Hertz U.K. Limited amended the U.K. Financing Facility to provide for aggregate maximum borrowings of up to £120 million, for a seasonal commitment period through October 2022. Following the expiration of the seasonal commitment period, aggregate maximum borrowings will revert to £100 million. Additionally, the U.K. Financing Facility was amended to extend the maturity of the aggregate maximum borrowings of £100 million to October 2023. In May 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $3.2 billion to $3.6 billion. In June 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $3.6 billion to $3.8 billion. Additionally, the maturity date of the Series 2021-A Notes Class A Notes was extended to June 2024. In June 2022, Hertz entered into the Repurchase Facility, whereby Hertz may sell the HVF III Series 2022 Class D Notes to the Repurchase Facility counterparty and repurchase such notes from time to time. Transactions occurring under the Repurchase Facility are based on mutually agreeable terms and prevailing rates. As of June 30, 2022, transactions totaling $236 million were outstanding under the Repurchase Facility and such transactions bear interest at a rate of SOFR plus 150 basis points and have a 30-day tenor. 54 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) In June 2022, the Hertz Canadian Securitization was amended to provide for aggregate maximum borrowings of CAD$450 million, for a seasonal commitment period through November 2022. Following the expiration of the seasonal commitment period, aggregate maximum borrowings will revert to CAD$350 million. Additionally, the Hertz Canadian Securitization was amended to extend the maturity of the aggregate maximum borrowings of CAD$350 million to June 2024. In July 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $3.8 billion to $3.9 billion. Non-vehicle Debt Financing In March 2022, Hertz increased the aggregate committed amount of the First Lien RCF from $1.3 billion to $1.5 billion and the sublimit for letters of credit from $1.1 billion to $1.4 billion and amended the First Lien RCF to change the benchmark from USD LIBOR to the SOFR based rate. In May 2022, Hertz increased the aggregate committed amount of the First Lien RCF from $1.5 billion to $1.7 billion and the sublimit for letters of credit from $1.4 billion to $1.6 billion. In June 2022, Hertz increased the aggregate committed amount of the First Lien RCF from $1.7 billion to $1.9 billion and the sublimit for letters of credit from $1.6 billion to $1.8 billion. In July 2022, Hertz increased the aggregate committed amount of the First Lien RCF by $55 million where the aggregate committed amount remains at $1.9 billion and the sublimit for letters of credit by $55 million where the aggregate sublimit remains at $1.8 billion. Substantially all of our revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of the lenders under the various credit facilities, other secured financings and asset-backed securities programs. None of the value of such assets (including the assets owned by Hertz Vehicle Financing III LLC and various international subsidiaries that facilitate our international securitizations) will be available to satisfy the claims of unsecured creditors unless the secured creditors are paid in full. Refer to Note 5, "Debt," in Part I, Item 1 of this Quarterly Report for information on our outstanding debt obligations and our borrowing capacity and availability under our revolving credit facilities as of June 30, 2022. Cash paid for interest on vehicle debt during the first half of 2022 and 2021 was $92 million and $203 million, respectively. The $111 million decrease in cash paid for vehicle debt interest is due primarily to the payoff and termination of vehicle debt in accordance with the Plan of Reorganization in 2021 and lower average rates from the issuance of HVF III ABS Notes. Cash paid for interest on non-vehicle debt during the first half of 2022 and 2021 was $74 million and $158 million, respectively. The $84 million decrease in cash paid for non-vehicle debt interest is due primarily to the payoff and termination of non-vehicle debt in accordance with the Plan of Reorganization in 2021. Our available corporate liquidity, which excludes unused commitments under our vehicle debt, was as follows: (In millions) June 30, 2022 December 31, 2021 Cash and cash equivalents $ 1,041 $ 2,257 Availability under the First Lien RCF 1,449 925 Corporate liquidity $ 2,490 $ 3,182 Letters of Credit As of June 30, 2022, there were outstanding standby letters of credit totaling $701 million comprised primarily of $245 million issued under the Term C Loan and $441 million issued under the First Lien RCF. As of June 30, 2022, no capacity remains to issue letters of credit under the Term C Loan. Such letters of credit have been issued primarily to support our insurance programs and to provide credit enhancement for our asset-backed securitization facilities, as well as to support our vehicle rental concessions and leaseholds. As of June 30, 2022, none of the issued letters of credit have been drawn upon. 55 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Covenants The First Lien Credit Agreement requires us to comply with the following financial covenant: a First Lien Ratio of less than or equal to 3.00 to 1.00 in the first and last quarters of the calendar year and 3.50 to 1.00 in the second and third quarters of the calendar year. This financial covenant was effective beginning in the third quarter of 2021. As of June 30, 2022, we were in compliance with the First Lien Ratio. In addition to the financial covenant, the First Lien Credit Agreement contains customary affirmative covenants including, among other things, the delivery of quarterly and annual financial statements and compliance certificates, and covenants related to conduct of business, maintenance of property and insurance, compliance with environmental laws and the granting of security interest for the benefit of the secured parties under that agreement on after-acquired real property, fixtures and future subsidiaries. The First Lien Credit Agreement also contains customary negative covenants, including, among other things, the incurrence of liens, indebtedness, asset dispositions and restricted payments. As of June 30, 2022, we were in compliance with all covenants in the First Lien Credit Agreement. Capital Expenditures Revenue Earning Vehicles Expenditures and Disposals The table below sets forth our revenue earning vehicles expenditures and related disposal proceeds for the periods shown: Cash inflow (cash outflow) Revenue Earning Vehicles (In millions) Capital Expenditures Disposal Proceeds Net Capital Expenditures 2022 First Quarter $ (2,985) $ 1,471 $ (1,514) Second Quarter (3,104) 1,416 (1,688) Total $ (6,089) $ 2,887 $ (3,202) 2021 First Quarter $ (1,517) $ 686 $ (831) Second Quarter (2,619) 513 (2,106) Total $ (4,136) $ 1,199 $ (2,937) The table below sets forth expenditures for revenue earning vehicles, net of disposal proceeds: Cash inflow (cash outflow) Six Months Ended June 30, ($ in millions) 2022 2021 $ Change % Change Americas RAC $ (2,787) $ (2,471) $ (316) 13 International RAC (415) (382) (33) 9 All other operations (1) — (84) 84 (100) Total $ (3,202) $ (2,937) $ (265) 9 (1) Substantially comprised of our Donlen business, which was sold on March 30, 2021 as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report. Revenue earning vehicle expenditures increased approximately $2.0 billion, or 47%, in the first half of 2022 compared to the 2021 period, primarily in our Americas RAC segment, resulting from vehicle acquisitions to refresh our fleet following Chapter 11 in 2021. Revenue earning vehicle disposal proceeds increased $1.7 billion for the first half of 2022 compared to the 2021 period resulting from increased vehicle dispositions due to strength in residual values. 56 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Non-Vehicle Capital Asset Expenditures and Disposals The table below sets forth our non-vehicle capital asset expenditures and related disposal proceeds from non-vehicle capital assets disposed of or to be disposed of for the periods shown: Cash inflow (cash outflow) Non-Vehicle Capital Assets (In millions) Capital Expenditures Disposal Proceeds Net Capital Expenditures 2022 First Quarter $ (30) $ 1 $ (29) Second Quarter (29) 5 (24) Total $ (59) $ 6 $ (53) 2021 First Quarter $ (9) $ 4 $ (5) Second Quarter (8) 6 (2) Total $ (17) $ 10 $ (7) The table below sets forth non-vehicle capital asset expenditures, net of disposal proceeds: Cash inflow (cash outflow) Six Months Ended June 30, ($ in millions) 2022 2021 $ Change % Change Americas RAC $ (45) $ (3) $ (42) NM International RAC (5) (1) (4) NM All other operations (1) — (1) 1 (100) Corporate (3) (2) (1) 50 Total $ (53) $ (7) $ (46) NM (1) Substantially comprised of our Donlen business, which was sold on March 30, 2021 as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report. NM - Not meaningful In the first half of 2022, expenditures for non-vehicle capital assets increased by $42 million compared to the 2021 period, primarily in our Americas RAC segment, resulting from the restart of location refurbishment projects put on hold during the Chapter 11 Cases. CONTRACTUAL OBLIGATIONS As of June 30, 2022, there have been no material changes outside of the ordinary course of business to our known contractual obligations as set forth in the table included in Part II, Item 7 of our 2021 Form 10-K. Changes to our aggregate indebtedness, including related interest and terms of new issuances, are disclosed in Note 5, "Debt," in Part I, Item 1 of this Quarterly Report. OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS Indemnification Obligations There have been no significant changes to our indemnification obligations as compared to those disclosed in Note 14, "Contingencies and Off-Balance Sheet Commitments," in Part II, Item 8 of our 2021 Form 10-K. We regularly evaluate the probability of having to incur costs associated with these indemnification obligations and have accrued for expected losses that are probable and estimable. 57 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS There have been no significant changes due to recently issued accounting pronouncements as compared to those disclosed in Note 2, "Significant Accounting Policies," in Part II, Item 8 of our 2021 Form 10-K. 58 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained or incorporated by reference in this Quarterly Report include "forward-looking statements." Forward-looking statements are identified by words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts," "guidance" or similar expressions, and include information concerning our liquidity, our results of operations, our business strategies and other information about our business. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate. We believe these judgments are reasonable, but you should understand that these statements are not guarantees of future performance or results and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative. Important factors that could affect our actual results and cause them to differ materially from those expressed in forward-looking statements include, among other things, those that may be disclosed from time to time in subsequent reports filed with or furnished to the SEC, those described under Item 1A, "Risk Factors," included in our 2021 Form 10-K and this Quarterly Report and the following, which were derived in part from the risks set forth in Item 1A, "Risk Factors," of our 2021 Form 10-K and this Quarterly Report: • the length and severity of COVID-19 and the impact on our vehicle rental business as a result of travel restrictions and business closures or disruptions, as well as the impact on our employee retention and talent management strategies; • the impact of macroeconomic conditions resulting in inflationary cost pressures resulting in labor and supply chain constraints, increased vehicle acquisition costs, and reductions in travel demand, among others; • our ability to purchase adequate supplies of competitively priced vehicles at a reasonable cost as a result of the continuing global semiconductor microchip manufacturing shortage (the "Chip Shortage") and other raw material supply constraints; • the impact of the conflict between Russia and Ukraine on supply chains and raw materials for the automotive industry and uncertainty on overall consumer sentiment and travel demand, especially in Europe; • the impact on the value of our non-program vehicles upon disposition when the Chip Shortage and other raw material supply constraints are alleviated; • our ability to attract and retain key employees; • levels of travel demand, particularly business and leisure travel in the U.S. and in global markets; • significant changes in the competitive environment and the effect of competition in our markets on rental volume and pricing; • occurrences that disrupt rental activity during our peak periods; • our ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in our rental operations accordingly; • our ability to implement our business strategy, including our ability to implement plans to support a large scale electric vehicle fleet and to play a central role in the modern mobility ecosystem; • our ability to adequately respond to changes in technology, customer demands and market competition; • the mix of program and non-program vehicles in our fleet can lead to increased exposure to residual risk; 59 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) • our ability to dispose of vehicles in the used-vehicle market and use the proceeds of such sales to acquire replacement vehicles; • financial instability of the manufacturers of our vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs; • an increase in our vehicle costs or disruption to our rental activity due to safety recalls by the manufacturers of our vehicles; • our access to third-party distribution channels and related prices, commission structures and transaction volumes; • our ability to offer an excellent customer experience, and retain and increase customer loyalty and market share; • our ability to maintain our network of leases and vehicle rental concessions at airports in the U.S. and internationally; • our ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy; • major disruption in our communication or centralized information networks or a failure to maintain, upgrade and consolidate our information technology systems; • our ability to prevent the misuse or theft of information we possess, including as a result of cyber security breaches and other security threats, as well as our ability to comply with privacy regulations; • risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anti-corruption or anti-bribery laws and our ability to repatriate cash from non-U.S. affiliates without adverse tax consequences; • our ability to utilize our net operating loss carryforwards; • risks relating to tax laws, including those that affect our ability to deduct certain business interest expenses and offset previously-deferred tax gains, as well as any adverse determinations or rulings by tax authorities; • changes in laws, regulations, policies or other activities of governments, agencies and similar organizations, including those related to accounting principles, that affect our operations, our costs or applicable tax rates; • the recoverability of our goodwill and indefinite-lived intangible assets when performing impairment analysis; • costs and risks associated with potential litigation and investigations, compliance with and changes in laws and regulations and potential exposures under environmental laws and regulations; and • the availability of additional or continued sources of financing for our revenue earning vehicles and to refinance our existing indebtedness. You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date of this Quarterly Report and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. 60 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of market risks, including the effects of changes in interest rates (including credit spreads), foreign currency exchange rates and fluctuations in fuel prices. We manage our exposure to these market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Derivative financial instruments are viewed as risk management tools and have not been used for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage our exposure to counterparty nonperformance on such instruments. There have been no material changes to the information reported under Part II, Item 7A of our 2021 Form 10-K. ITEM 4. CONTROLS AND PROCEDURES HERTZ GLOBAL Evaluation of Disclosure Controls and Procedures Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2022, our disclosure controls and procedures were effective. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. HERTZ Evaluation of Disclosure Controls and Procedures Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2022, our disclosure controls and procedures were effective. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 61 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS For a description of certain pending legal proceedings see Note 12, "Contingencies and Off-Balance Sheet Commitments," in Part I, Item 1 of this Quarterly Report. ITEM 1A. RISK FACTORS Part I, Item 1A of our 2021 Form 10-K for the year ended December 31, 2021, includes certain risk factors that could materially affect our business, financial condition or future results. There have been no material changes in those risk factors, except as listed below: Risks Related to our Business Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine. The global economy has been negatively impacted by the military conflict between Russia and Ukraine. Furthermore, governments in the U.S., United Kingdom, and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. Shortages in materials and increased costs for transportation, energy, and raw material, as well as uncertainty on overall consumer sentiment and travel demand, especially in Europe, are some of the negative impacts of the Russia-Ukraine military conflict on the global economy. In particular, shortages and increased costs relating to raw materials extracted from, or components produced in, Russia and/or Ukraine, which are important to the vehicle manufacturing industry including the production of electric vehicle batteries, may impact vehicle production volumes, delivery schedules and costs. Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and further exacerbate supply chain issues in the automotive industry. In addition, the effects of the ongoing conflict could heighten many of our known risks described in Part I, Item 1A, "Risk Factors" in our 2021 Form 10-K. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The following table provides a breakdown of our equity security repurchases during the second quarter of 2022. (a) Total number of shares purchased (b) Average price paid per share (c) Total number of shares purchased as part of the publicly announced plan or program (d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the publicly announced plan or program (In thousands) Common Stock April 1 – April 30, 2022 4,527,052 $ 22.26 4,527,052 $ 769,702 May 1 – May 31, 2022 21,877,455 $ 19.14 21,877,455 $ 351,020 June 1 – June 30, 2022 20,515,479 $ 18.09 20,515,479 $ 1,979,998 Total 46,919,986 $ 18.98 46,919,986 $ 1,979,998 In November 2021, Hertz Global's Board of Directors approved the 2021 Share Repurchase Program that authorized the repurchase of up to $2.0 billion worth of shares of Hertz Global's outstanding common stock. Between January 1, 2022 and June 30, 2022, a total of 80,677,021 shares of Hertz Global's common stock were repurchased at an average share price of $19.74 for an aggregate purchase price of $1.6 billion. During the second 62 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES quarter of 2022, the Company completed the 2021 Share Repurchase Program. A total of 97,783,047 shares of Hertz Global common stock were repurchased since the inception of this program for an aggregate purchase price of $2.0 billion. In June 2022, Hertz Global's Board of Directors approved the 2022 Share Repurchase Program that authorized additional repurchases of up to an incremental $2.0 billion worth of shares of Hertz Global's outstanding common stock. In June 2022, a total of 1,207,930 shares of Hertz Global's common stock were repurchased under this program at an average share price of $16.56 for an aggregate purchase price of $20 million. Repurchases under the 2022 Share Repurchase Program may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The authorization does not have a stated expiration date. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, share price, market conditions and other factors. The repurchase program does not obligate Hertz Global to acquire any particular amount of common stock and may be discontinued at any time. There can be no assurance as to the timing or number of any share repurchases. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 5. OTHER INFORMATION The Company’s former Executive Vice President, General Counsel and Secretary, Mr. M. David Galainena retired effective June 30, 2022. On April 25, 2022, the Board of Directors of Hertz Holdings, upon recommendation of its Compensation Committee, approved certain amendments to Mr. Galainena’s compensation in light of his agreement to remain with the Company to facilitate a transition of his duties. The amendments provided Mr. Galainena certain benefits in addition to those to which he is entitled under the severance provisions of the Plan of Reorganization, contingent on his remaining with the Company through June 30, 2022 and executing a release of claims in favor of the Company. Pursuant to the amendments, on June 30, 2022, Mr. Galainena’s last day of employment (the “Employment Termination Date”), (i) he received a cash payment equal to his target bonus for fiscal year 2022, pro-rated through the Employment Termination Date, (ii) an aggregate of 26,667 restricted stock units and 80,000 stock options vested, and (iii) the exercise period for his vested stock options was extended to June 30, 2023. ITEM 6. EXHIBITS (a) Exhibits: The attached list of exhibits in the "Exhibit Index" immediately following the signature page to this Quarterly Report is filed as part of this Quarterly Report and is incorporated herein by reference in response to this item. 63 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. Date: July 28, 2022 HERTZ GLOBAL HOLDINGS, INC. THE HERTZ CORPORATION (Registrants) By: /s/ KENNY CHEUNG Kenny Cheung Executive Vice President and Chief Financial Officer 64 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES EXHIBIT INDEX Exhibit Number Description 10.1 Hertz Holdings Hertz Amended and Restated Series 2021-A Supplement, dated as of June 24, 2022, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, Deutsche Bank AG, New York Branch, as program agent, the several committed note purchasers party thereto, the several conduit investors party thereto, the several funding agents for the investor groups party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 10.1 to the Current Report of Hertz Global Holdings, Inc. (File No. 001-37665) and The Hertz Corporation (File No. 001-07541) as filed June 27, 2022) . 10.2 Hertz Holdings Hertz Amendment No. 5 dated June 23, 2022 to Credit Agreement dated June 30, 2021, by and among The Hertz Corporation and the subsidiary borrowers party thereto as borrowers, the several lenders and issuing lenders from time to time parties thereto, and Barclays Bank PLC, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.2 to the Current Report of Hertz Global Holdings, Inc. (File No. 001-37665) and The Hertz Corporation (File No. 001-07541) as filed June 27, 2022) . 10.3 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to Base Indenture, dated as of June 29, 2021, between Hertz Vehicle Financing III LLC, as issuer, and The Bank of New York Mellon Trust Company, N.A. as trustee .* 10.4 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to Master Motor Vehicle Operating Lease and Servicing Agreement dated as of June 29, 2021, among Hertz Vehicle Financing III LLC, as lessor, The Hertz Corporation, as lessee, servicer and guarantor, DTG Operations, Inc. as lessee, and those permitted lessees from time to time party thereto. * 10.5 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to Series 2021-1 Supplement, dated as of June 30, 2021, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee. * 10.6 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to Series 2021-2 Supplement, dated as of June 30, 2021, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee. * 10.7 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to Series 2022-1 Supplement, dated as of January 19, 2022, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee. * 10.8 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to 2022-2 Supplement, dated as of January 19, 2022, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee. * 10.9 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to 2022-3 Supplement, dated as of March 30, 2022, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee. * 10.10 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to 2022-4 Supplement, dated as of March 30, 2022, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee. * 10.11 Hertz Holdings Hertz Amendment No. 1 dated June 27, 2022 to 2022-5 Supplement, dated as of March 30, 2022, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee. * 10.12 Hertz Holdings Hertz Amended and Restated Issuer Facility Agreement dated as of June 21, 2022, by and among International Fleet Financing No. 2 B.V., Hertz Europe Limited, Credit Agricole Corporate and Investment Bank, certain committed note purchasers, conduit investors and funding agents named therein, and BNP Paribas Trust Corporation U.K. Limited. * 65 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES EXHIBIT INDEX (Continued) Exhibit Number Description 10.13 Hertz Holdings Hertz Amended and Restated Master Definitions and Constructions Agreement dated as off June 21, 2022, by and among International Fleet Financing No. 2 B.V., Hertz Automobielen Nederland B.V., Stuurgroep Fleet (Netherlands) B.V., Hertz France S.A.S., RAC Finance S.A.S., Hertz De Espana SL, Hertz Autovermietung GMBH, Hertz Fleet Limited, Eurotitrisation S.A., BNP Paribas Securities Services, BNP Paribas S.A., Credit Agricole Corporate and Investment Bank, Hertz Europe Limited, The Hertz Corporation, BNP Paribas Securities Services, Luxembourg Branch, TMF SFS Management BV, TMF France Management SARL, TMF SAS, KPMG S.A., BNP Paribas Trust Corporation UK Limited, BNP Paribas Securities Services, BNP Paribas S.A., Dublin Branch, BNP Paribas S.A., Netherlands Branch, Sanne Trustee Services Limited, certain committed note purchasers, conduit investors and funding agents named therein, Hertz Holdings Netherlands 2 B.V. and Hertz International Limited. * 10.14 Hertz Holdings Hertz Amended and Restated Dutch Master Lease and Servicing Agreement dated as of June 21, 2022, by and among Stuurgroep Fleet (Netherlands) B.V., Hertz Automobielen Nederland B.V., those Permitted Lessees from time to time becoming Lessees thereunder, and BNP Paribas Trust Corporation UK Limited. * 10.15 Hertz Holdings Hertz Amended and Restated French Master Lease and Servicing Agreement, dated as of June 21, 2022, by and among RAC Finance SAS., Hertz France SAS., those Permitted Lessees from time to time becoming Lessees thereunder, and BNP Paribas Trust Corporation UK Limited. * 10.16 Hertz Holdings Hertz Amended and Restated German Master Lease and Servicing Agreement, dated as of June 21, 2022, by and among Hertz Fleet Limited, Hertz Autovermietung GMBH, those Permitted Lessees from time to time becoming Lessees thereunder, and BNP Paribas Trust Corporation UK Limited. * 10.17 Hertz Holdings Hertz Amended and Restated Spanish Master Lease and Servicing Agreement dated as of June 21, 2022, by and among Stuurgroep Fleet (Netherlands) B.V., Stuurgroep Fleet (Netherlands) B.V., Sucursal en Espana, Hertz de Espana, S.L.U., those Permitted Lessees from time to time becoming Lessees thereunder, and BNP Paribas Trust Corporation UK Limited. * 10.18 Hertz Holdings Hertz Form of Restricted Stock Unit Agreement (2022) under the 2021 Omnibus Incentive Plan. † * 10.19 Hertz Holdings Hertz Form of Performance Stock Unit Agreement (2022) under the 2021 Omnibus Incentive Plan. † * 10.20 Hertz Holdings Hertz Form of Executive Sign-On Performance Stock Unit Agreement under the 2021 Omnibus Incentive Plan . † * 10.21 Hertz Holdings Hertz Aircraft Time Sharing Agreement dated as of April 22, 2022 between The Hertz Corporation and Stephen M. Scherr. † * 10.22 Hertz Holdings Hertz Confidential Severance Agreement and General Release of Claims dated June 30, 2022 between The Hertz Corporation and M. David Galainena. † * 10.23 Hertz Holdings Hertz Confidential Severance Agreement and General Release of Claims dated June 14, 2022 between The Hertz Corporation and Angela Brav. † * 31.1 Hertz Holdings Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).* 31.2 Hertz Holdings Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).* 31.3 Hertz Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).* 31.4 Hertz Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).* 32.1 Hertz Holdings Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.** 32.2 Hertz Holdings Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.** 32.3 Hertz Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.** 32.4 Hertz Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.** 66 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES EXHIBIT INDEX (Continued) Exhibit Number Description 101.INS Hertz Holdings Hertz InIine XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Hertz Holdings Hertz Inline XBRL Taxonomy Extension Schema Document* 101.CAL Hertz Holdings Hertz Inline XBRL Taxonomy Extension Calculation Linkbase Document* 101.DEF Hertz Holdings Hertz Inline XBRL Taxonomy Extension Definition Linkbase Document* 101.LAB Hertz Holdings Hertz Inline XBRL Taxonomy Extension Label Linkbase Document* 101.PRE Hertz Holdings Hertz Inline XBRL Taxonomy Extension Presentation Linkbase Document* 104 Hertz Holdings Hertz Cover Page Interactive Data File (Embedded within the Inline XBRL document) ______________________________________________________________________________ † Indicates management contract or compensatory plan or arrangement * Filed herewith ** Furnished herewith 67