Welcome to Hertz Global Holdings First Quarter 2013 Earnings Conference Call. The company has asked me to remind you that certain statements made on this call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance and, by their nature, are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only of this date, and the company undertakes no obligation to update that information to reflect changed circumstances. Additional information containing these statements is contained in the company's press release regarding its fourth quarter results issued this morning and in the Risk Factors and Forward-Looking Statements section of the company's 2012 Form 10-K. Copies of these filings are available from the SEC, the Hertz website or the company's Investor Relations department. I would like to remind you that today's call is being recorded by the company and is also being made available for replay starting today at 12:30 p.m. Eastern Time and running through May 14, 2013. I would now like to turn the call over to our host, Leslie Hunziker.

Good morning. You should all have our press release and associated financial information. We've also provided slides to accompany our conference call that can be accessed on our website at www.hertz.com, Investor Relations. Today, we'll use certain non-GAAP financial measures, all of which are reconciled with GAAP numbers in our press release and at the back of the slide presentation, both of which are posted on our website. We believe that our profitability and performance is better demonstrated using these non-GAAP metrics. Our call today focuses on Hertz Global Holdings Inc., the publicly held company. Results for the Hertz Corporation differ only slightly, as explained in our press release. With regard to our IR calendar, we'll be presenting at the Wells Fargo Industrials Conference on May 8 in New York City and at the Barclays High Yield Conference in Chicago on May 21. This morning, in addition to Mark Frissora, Hertz's Chairman and CEO; and Elyse Douglas, our Chief Financial Officer, on the call, we have Scott Sider, Group President of Rent-A-Car, The Americas; Michel Taride, Executive Vice President and President of Hertz International; and Lois Boyd, Group President of Hertz Equipment Rental Corporation. They'll all be on hand for the Q&A session. Now I'll turn the call over to Mark.

Good morning, everyone, and thanks for joining us. Let's start on Slide 5. You can see that 2013 is off to a strong start. Consolidated revenue was up 24.3% worldwide in the first quarter. Clearly, the 38% growth in U.S. Rent-A-Car was a big driver of the top line increase, primarily due to the incremental Dollar Thrifty volumes. But we're really operating on all cylinders. U.S. rental car off-airport revenue was 14% higher in the first quarter. Our North American equipment rental business was up 20% when you exclude the effects of currency, and Donlen Leasing and Fleet Management revenue increased 16% to $128 million. Corporate EBITDA was up 74.2% year-over-year, representing a 440-basis-point margin improvement. Profits were driven by strong revenue growth, a 200-basis-point decline in total consolidated fleet depreciation expense as a percent of sales, this is on Slide 6, and a 180-basis-point decline in direct operating and SG&A expenses as a percent of sales, which resulted in 5.4% higher revenue per employee. On the next slide, adjusted pretax income was $144.5 million, significantly eclipsing the $29 million generated last year, and adjusted pretax margin was 4x higher year-over-year. We reported adjusted earnings per share of $0.21 in the latest period compared with a $0.05 profit last year. Strong contributions in North America from both rental car and equipment rental more than offset soft European results. Let's review some of the highlights by business unit. In the U.S., on Slide 8, rental car revenue was up 38.1%, supported in part by the incremental volume from Dollar Thrifty, which we acquired in November of 2012. Higher pricing across the board and robust off-airport volumes. Total U.S. rental car volume increased nearly 32%, driven by leisure airport, inbound, insurance replacement and 51 net new locations off airport. This higher demand…

Thanks, Mark, and good morning, everyone. For the first time since going public in 2006, we recorded a positive first quarter GAAP earnings per share of $0.04, an improvement of $0.17 versus the first quarter of 2012. Major contributors to this achievement were strong revenue growth of 24.3%, driven by stronger volumes and better pricing in both rental car and equipment rental, and lower net depreciation per vehicle in our car-rental segment. The inclusion of the Dollar Thrifty fleet, lower depreciation rates, lower car costs in Europe, continued growth in retail car sales channels and an increase in mix of risk cars in the U.S. more than offset softening residuals. And while direct operating expenses increased 21.3%, primarily due to the acquisition of Dollar Thrifty, they declined by 150 basis points as a percent of revenue as improved pricing and labor productivity more than offset higher damage cost, due in part to increased winter storms this year compared to the first quarter of 2012. Also, the actions we've taken to improve our debt structure are reflecting favorably in net interest expense, where the first quarter of 2013 was only 7.3% of revenue versus 8.3% in the same period of 2012. Now let me talk about the EPS calculation. First of all, as a reminder, when we report positive GAAP net income, we fully dilute the share count when calculating both GAAP earnings per share and adjusted earnings per share. The share count is diluted for incentive stock-related items and the convertible notes. In March, we purchased 23.2 million shares of common stock in connection with the private equity sponsor sale of 60 million shares, bringing their ownership down to 12.5%. The shares we purchased will be held as treasury stock. And we announced our intent to settle the conversion of…

Thanks, Elyse. As I mentioned -- I'd like to pick this up on Slide 29 again. As I mentioned before, the first quarter financial results came in better than expected. It was really a strong quarter across the board for us. The Dollar Thrifty integration synergies are tracking ahead of plan. We installed our car-sharing technology in roughly 25,000 vehicles globally in the first quarter, and we're continuing with the rollout with a goal of having at least 80,000 telematic packages installed by year end. Our current installed base gives us the largest car-sharing fleet in the world now by a large margin. We also opened up both off-airport and equipment rental facilities over the past 3 months to address the higher volumes in those markets, and we saw what we hope is the beginning of growth in Europe. Looking ahead on Slide 30, in terms of fleet costs, the first quarter improvement in the U.S. was significant but also had the easiest comp this year. As we mentioned in February, the second and third quarters will be more difficult. In response to recorded gains on car sales, we made adjustments to depreciation rates in each of those quarters last year. But for the full year, we're still expecting U.S. monthly depreciation per vehicle to be down 4% to 5%. On the top line in April, we experienced some softness in both the car and equipment rental businesses in the U.S. due to the holiday shift and the initial impact of the sequester. Volumes in our government businesses were down double digits this month in our commercial accounts. With exposure, 2 government customers also cut back on travel. The volume softness has had an impact on U.S. rental car pricing at a time when the industry is seasonally over-fleeted as we begin to fleet up for the summer peak. When April pricing was weaker than the first quarter overall, it was expected due to the holiday shift. Based on what we see today, conditions are still positive for pricing in 2013 due to lower used car residuals driving fleet costs higher, which, as I said, strongly correlates to higher rental rates. For the full year, keeping our original volume assumptions intact, we continue to be comfortable with the 2013 guidance we announced in February, which is reaffirmed on Slides 31 and 32. Let's open it up to questions now. Operator?

[Operator Instructions] And our first question, we'll go to the line of Adam Jonas with Morgan Stanley.

There was a slide that you put in the second quarter -- sorry, in the fourth quarter deck that we didn't see here on U.S. monthly rack depreciation per unit. Could you update us there? And also, your utilization down year-on-year, you highlighted that's because of growth in the used business, having more of the inventory available. Adjusting for that, would your utilization have been more -- would it have been exactly stable or perhaps improving year-on-year?

On the depreciation question, do you have an answer, Elyse, on that? I don't know. I don't have the data in front of me.

Yes, I mean, we've given, in the past, U.S. per unit costs, which are down 5.3%. And in Europe the unit cost is down 2.4%.

Okay. And then the second part of your question dealt with?

So with -- if you -- without the retail car sales, the utilization would have been about flat year-over-year in Q1.

Okay, so it would've been flat without the retail sales increase that we're actually experiencing and having those cars in queue, right?

Correct.

Right. The primary driver, as I mentioned, when we talked about in the earnings script that we just read was the fact that we were operating with 3 fleets: Advantage, Dollar Thrifty and Hertz. So we expect to actually get significant utilization improvement over the next couple of years as we combine our systems and work out the efficiency due to the demands, which are just the opposite in terms of when the peak and trough are with Dollar Thrifty versus Hertz.

Our next question will go to line of Brian Johnson with Barclays.

Can you give us a sense of -- just can you quantify both the pace and time -- the amount and the kind of timing of the DTG synergies? You're saying they're going ahead of schedule. Does that mean we could potentially see what you previously guided to faster, and if so, when? Or is there potential, especially as you bring these fleets together, to see even greater synergies?

Yes, I think, in the past we've described them as $100 million a year each year, and I'm not -- roughly, I mean, so it's ratably over the 3-year period. I really don't -- I'm not comfortable, at this point anyways, telling you what's going to be more or less. At this point, we're just starting and -- but we had our own monthly goals, and we were able to exceed those monthly goals. And so until we get more into the heavier lifting months where the goal start to go up, I'm not comfortable forecasting a higher number at this point, so pretty much status quo right now.

And our next question will go to line of Michael Millman with Millman's Research.

Could you give us some idea of what you're seeing in the res book regarding pricing and maybe which markets are weaker or stronger? And also, by holding cars longer, can you decrease your depreciation? And to what extent?

Okay. So the first question, which dealt prospectively with pricing, we don't talk prospectively about pricing for obvious reasons, but we can say, as I mentioned to you in the script that we've just talked through, we think industry continues -- industry conditions continue to be right for good prices and good price increases. In terms of the res build, what we see going forward, again, as I mentioned before, a little weak this month due to a variety of factors. We expected to see weakness this month. The question on depreciation, in terms of aging the fleet, you can always age the fleet and actually help your depreciation curve, so that's always an option that rental car companies have if they believe that there are certain types of fleet they want to age, and that can help them if it makes sense to -- the maintenance costs don't outweigh, if you will, the aging, that's the way you think about it, because you have to make sure that if you are going to age your fleet, the increased maintenance costs are offset by better depreciation and there's no customer service issues, so that is a methodology that companies use.

Next question we'll go to line of Rich Kwas with Wells Fargo Securities.

Mark, on equipment rentals, so Q1 came in better than expected. Was mix better than expected or was this all just volume coming through?

I think it's just volume coming through. It wasn't a mix issue, really. I mean, other than -- I mean, we planned for some mix shift going on this year. And so it was on the plan, executed well in the quarter. Pretty much had great execution of all of our businesses. Everyone came in where they were supposed to or better, so again, felt good about the execution and felt good about the mix, a little bit of goodness on the pricing front. We were expecting good pricing given what the holiday season was on the U.S. Rent-A-Car side. But yes, pretty much good execution around the board and on the equipment rental side. Things came in as expected. Maybe volume was a little bit stronger than we had anticipated. I think that was the only thing in the quarter that might have been good to what we had originally anticipated, a little bit stronger than we thought.

Next question comes from the line of Afua Ahwoi with Goldman Sachs.

Just sticking a little bit on the pricing issue. For April, given that Easter was obviously in the first half of the month, did you see a difference as the weeks progressed throughout April? And then just really quickly on the emerging markets exposure with China. Is there any other markets that you're looking at to do similar acquisitions or joint ventures?

Yes, so on the pricing front, obviously, March was stronger than it should have been because of the holidays, having Easter in March. And so weakened, if you will, the first couple of weeks in April, and yes, we did see improvement as April continued in the back half of April, so that's very true, what you're suggesting. In terms of other transactions or anything else we're considering, I mean, we're always looking at emerging markets, but we consider emerging markets really to be -- the ones we're investing in would be Brazil and India and China, and we're always looking for partners, as well as things that we can do to improve our position in those emerging markets. But in terms of -- I'm not indicating we have any deal pending at all. I was just saying that, that's something of an opportunity that we're always looking forward to and always looking at the marketplace to improve our position.

Next we'll go to line of John Healy with Northcoast Research.

Mark, I wanted to ask about DTG again. You've had the business now for about 5 or 6 months, and I was hoping maybe you could give us some color about maybe what your biggest surprises have been since you've been in there and kind of looking at things, getting to know the folks and kind of bringing the Hertz practices and mixing them with the DTG practices. Maybe your biggest surprise to the upside and maybe your biggest surprise to the downside would be helpful.

I think there really hasn't been any downside. I think the company was well run when we bought it. They have a lot of best practices that they were using that we've actually have done up to tier at Hertz, in some cases. They have -- they had good -- really good management team, a very entrepreneurial culture. They had stripped the business down to its most fundamental structure after the recession that they went through and the tough times that they incurred. So we didn't add a good lean model with good talent, good entrepreneurial spirit, and we're trying to adopt as much of that as we can into a much bigger company and then take anything that we thought was really well done and adopting it as our own and being very open-minded about that. And I've also included -- several members on my senior team now include Dollar Thrifty personnel, so again very positive, nothing really negative to report. There have been no bad surprises here, just positive ones.

Next we'll move to the line of Fred Lowrance with Avondale Partners.

Mark, just wanted to dig in a little bit more on a question -- a couple of questions ago. If you look at -- with this Easter shift, if you look at March and April together, how would you -- what would you say your pricing and volumes kind of look like in relation to the first 2 months of the year, which I think we knew were going to be strong? But again, take March and April together, how does that look?

I don't know if I've actually combined those 2 months and looked at overall pricing. But again, in April, traditionally, people are over-fleeted, so the fleets are -- certainly aren't tight right now. They haven't -- they weren't tight last week. They're not tight this week. Everyone -- no one's off-selling right now. So when fleets are looser, pricing usually weakens. Having said that, volume, as demand increases as we move into the summer season, the opportunity for pricing becomes better. Overall, for those 2 months, I think it's clear to say that we'd have an overall positive pricing number. But again, I don't want to get into prospective pricing discussions, but the pricing is certainly weaker than it was in the first couple of months given that the first couple of months had some seasonality in the pricing due to the way Christmas and the holidays fell from 2012 to 2013.

Next we'll move to the line of Christopher Agnew with MKM Partners.

I wonder if I could ask about what you're seeing for corporate pricing trends in the first quarter. And then can you also -- you discussed government and corporate accounts with government exposure. How much of that is -- or what percentage is that of your mix?

Government business in the Rent-A-Car side is probably only about 3% or 4% of our volume, but there were ancillary travel-related impact that we get overall. And Government business right now is down 25% April month-to-date, but -- and it was up the first 2 months, just so you know. It's a small percent of our mix, but it does include a lot of customers that we do business with who do business with the government segment. My guess is probably in the range of 10% to 15% of our revenues have some kind of impact or some kind of a corollary to the government. In the equipment rental side, same thing, probably 15% to 20% of our customers there are tied to the government, and it could be government projects that are funding local municipalities. It could be actually government customers that we have. So all in all, that impact, when it's down significantly, can have an impact to our overall revenue base. So I think that's about the best way I can answer it.

We'll move to the line of Philip Volpicelli with Deutsche Bank.

Could you please prioritize the uses of the free cash flow that you plan to generate from 2013 between share repurchases, debt reduction, acquisitions and possible dividends?

Sure. I'll take that. Obviously, we took on some debt to buy Dollar Thrifty, so we'll be looking at paying down debt, but we're also looking at investments in the business. And so as we weigh the pros and cons, we'll make the best decision that we think will drive better shareholder value. So I guess in the short run, it will be debt repayment, but we're also looking at investments, and then down the road we'll be looking at return to shareholders.

Once we become investment-grade.

Right, once we become closer to investment-grade.

Statistics, right?

We do have a follow-up question from the line of Fred Lowrance with Avondale Partners.

I was just trying to get a follow-up in there on that -- the March, April thing. I was just interested to see if you -- what I was trying to get to is, if you strip out that Easter shift kind of like Afua was trying to get to and you look at the second half of April, would you -- obviously, you've got a sequester going on, we know that's impacting other travel businesses as well, but would you still sort of classified that period as soft on a year-over-year basis? And then, unrelated, can you give us sort of your latest commentary on the FTC's digging into investigation of the whole Advantage divestiture?

Okay, so again, going back to the pricing question that you just asked, I think the best way to answer it is, we're not surprised at the weaker volume and pricing that's going on right now. So there was no surprise here. We still believe the overall pricing environment is positive. So I don't want investors to read too much into this and think that we think that pricing's crashed and burned. We don't think that's happened. We expected pricing to be weaker in April because volumes softened in April. The Easter fall -- the holiday fall made it even worse than normal, and we were expecting that. So just trying to explain it so people understand why it's a little weaker and why volume's a little weaker. It has to do with the holiday effect, plus we think the sequester had some issues. But that doesn't mean that the environment, we think, has changed or that there's some significant big risk on the pricing environment out there. We think that this year, again, will bode well, pricing environment given that there's tight -- given that there are fleet cost increases and some residuals weakening, that usually bodes well for the industry. The industry usually moves pricing up with a fairly higher R squared, as you look at our business historically over the last 40 years. And then on the FTC, as we said previously, Hertz has continued to work cooperatively with the FTC. We're in full compliance with all the requirements of the consent decree and all -- today, all the divestitures required under the terms of the decree have totally gone smoothly. And based upon the communication we've had directly with the FTC staff and to our council, we've got no reason to believe the commission will not execute the consent decree in due course. We've got no comments on the matter that goes between the buyers of Advantage and the FTC. That's their issue. It has nothing to do with us, so we see no issues with the consent decree being issued. It's just a formality at this point, making sure that they tie up their loose ends with the buyer of Advantage. And we believe that's proceeding smoothly, from what we've heard.

And next we'll go to line of Yilma Abebe with JPMorgan. Yilma Abebe - JP Morgan Chase & Co, Research Division: On the equipment rental business, away from seasonality like you described and away from the government-related business, the 15% to 20% of the business, how does the balance of the business look like in April?

I think just in general, the balance of the business is solid. It's kind of where we expected it. So we have -- the one thing that I need to remind investors of is that we have growth drivers that are growing us way beyond the market on the equipment rental side. We're outpacing the market in the Rent-A-Car side. We're outpacing the market in off-airport, in Donlen and in leisure, so we're definitely growing faster because we've got not only the revenue synergies on the leisure side, but we have more outlets that have leisure product than what we had in the past. We weren't able to take advantage of that growth in the past. So Hertz, unlike the other rental car companies, never had a leisure brand to speak of in all of the airports. So this is helping us grow faster than the market because of it. So we feel pretty good about our resiliency given some of the issues that I talked about, like the sequester. Volume is good in April.

And our final question comes from the line of Christopher Agnew with MKM Partners.

I wonder if you could discuss the opportunity in Europe given expansion of Thrifty stores and the rebranding of Advantage to Firefly and what you see as the sort of market opportunity there given such a fragmented value leisure base. I think it's 25% of market is relatively fragmented.

Yes, for us in Europe, we view Europe positively, and certainly in the second half of the year and moving in the second quarter, we think there's going to be year-over-year improvement due to a couple of different issues. One is volume growth. Obviously, when you add 143 locations and you launch Firefly, which we think is even a better brand than Advantage, and you do that in a differentiated way, which we're doing, separation of uniforms, cars and people, that we think that's going to be a big boost to revenue. We also believe that our fleet changes that we've made there to match what we do in the U.S., we're selling cars in more profitable channels. Our volume is up 42% on used cars. We're improving the amount of used cars that we sell and, again, selling them in better channels. Our fleet depreciation will continue to be favorably disposed. It will be down year-over-year. So in spite of some issues around the European economy, we think we've reached a low point and we're improving. So inbound, there's a big opportunity with these brands that we never had before, so the new Dollar Thrifty brands gives us a lot of inbound opportunities well that never existed. And I think Europe -- again, I've invested a lot in the restructuring of Europe over the last 12 to 18 months. We'll start realizing the benefits of that also in the second half of the year. So we have a lot of good things that will be happening, we believe, in Europe, both on the growth side as well as the efficiency side coming up over the next 6 months.

This is all the time we have for questions today.

All right. So again, I want to thank everyone for attending the call, and look forward to talking to you and updating you at the next call.

That does conclude our conference for today. Thank you for your participation and for using AT&T TeleConference service. You may now disconnect.