Welcome to the Hertz Global Holdings First Quarter 2016 Earnings Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. I would like to remind you that today's call is being recorded by the company. I would like to now turn the call over to your host, Leslie Hunziker. Please go ahead.

Good morning, everyone. By now 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. I want to remind you that certain statements made on this call contain forward-looking information 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 as of this date, and the company undertakes no obligation to update that information to reflect changed circumstances. Additional information concerning these statements is contained in our earnings press release issued last night and in the Risk Factors and Forward-Looking Statement section of our first quarter 2016 Form 10-Q. Copies of these filings are available from the SEC, the Hertz website or the company's Investor Relations department. Today, we'll use certain non-GAAP financial measures, all of which are reconciled with GAAP numbers in our press release, which is 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-traded company. Results for the Hertz Corporation differ only slightly as explained in our press release. With regard to the IR calendar, on June 7, we'll be attending the Goldman Sachs Lodging, Gaming, Restaurant & Leisure Conference in New York. We hope to see some of you there, and of course, that presentation will be webcast. This morning, in addition, to John Tague, Hertz's CEO; and Tom Kennedy, our Chief Financial Officer, on the call we have Larry Silber, Chief Executive Officer of Hertz Equipment Rental; and Jeff Foland, our Chief Revenue Officer will be on-hand…

Thank you. We do have our first question from the line of Chris Woronka with Deutsche Bank. Please go ahead.

Hey. Good morning, guys. John P. Tague - President, Chief Executive Officer & Director: Good morning.

You guys mentioned some brand repositioning coming up in the fourth quarter, and I can understand, you might not want to give us all the details as yet, but can you give us a sense directionally what the goal is going to be there? John P. Tague - President, Chief Executive Officer & Director: Well, I think, foundationally what we've been focused on first and foremost is improving the customer experience off of each of these brands. So, clearly when we reposition and invest in these brands going forward, we want to do it on a foundation of strength and quality of service, and I think, we're getting at that point where we can have that level of confidence. Look, differentiation amongst brands is historically a struggle in this business, but there are clearly reasons to have multiple brands. So I think going forward, both in terms of customer experience and brand positioning, we're going to continue to push Hertz up as the premium rental car brand in the market, while creating appropriate value positions for the other brands that address their own segmentation. We're also going to try and drive cost out of customer experience delivery across all of the brands and to the greatest extent possible create a differentiated cost position in the value brands.

Okay. Very good. And then you mentioned shifting the fleet mix a little bit. I was just wondering if you could give us an idea what's going on there. Is this within a segment or size of car or is it more about risk versus program? John P. Tague - President, Chief Executive Officer & Director: Well, I think what we experienced during 2015 was really an outcome where we took more compacts than probably in an ideal world we would have wanted to in order to access the total fleet plan we wanted. As a result of that, our rented fleet mix quality declined year-over-year and had an impact on our RPD results. We believe we can affect strategy to return to a more normalized fleet mix over the next three to 12 months, and we're undertaking that now and we expect this effect to be temporary.

Okay, great. Thanks, John.

We have a question from the line of Adam Jonas from Morgan Stanley. Please go ahead. Adam Michael Jonas - Morgan Stanley & Co. LLC: Hey, everybody. First, you mentioned a few times in your prepared remarks suggesting that pricing is moderating into the second quarter. Without being too specific, could you tell us categorically, if I gave you three options, does that mean down by a more modest amount, stable or possibly improving? What category would you say it in, real time-ish? John P. Tague - President, Chief Executive Officer & Director: It's category four, observing trends and watching them develop here which are currently moving in the right direction. I wouldn't say that our concern about pricing is over. We're merely encouraged by the directional improvement, but it needs to continue and it needs to be more steep as we move forward. Again, if we get back to supply decisions are impacted by that, obviously the peak season tends to mitigate an overhang, and it will be important that as we assess our fleeting coming off the peak in the Labor Day timeframe that we consider de-fleeting possibly more than would be normally seasonally required depending upon how the market develops. Adam Michael Jonas - Morgan Stanley & Co. LLC: Just as a follow-up, on the cost guidance, so you're saying $350 million for 2016 year-on-year cost savings, most of that heavily backend loaded towards the end of the year. Could you give us an idea then of the year-on-year looking into 2017; how much will be left in terms of year-on-year cost savings bridge from 2015 to 2017? Tom Kennedy - Chief Financial Officer & Senior Executive Vice President: Yes, Adam, this is Tom. So we haven't disclosed yet all of our initiatives that will impact 2017,…

We have a question from the line of Anj Singh with Credit Suisse. Please go ahead. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC (Broker): Hi. Good morning. Thanks for taking my questions. John, you talked about Q3 of fiscal 2015 being an inflection point in your results. And you've definitely made considerable progress on multiple fronts since then. But given the encouraging trends in pricing that you're seeing, if you had to think about when a similar inflection point could happen for U.S. RAC, RPD, or your preferred metric of RACD, when do you think it would be? John P. Tague - President, Chief Executive Officer & Director: Well, I think we expect things to improve in the second quarter, but I think it's too soon to call it an inflection point. I would expect to see – be more satisfied in the third, but I'm not prepared to say that's a hockey-stick inflection point. It's simply things improving. I do truly believe this is transitory. I think all the industry participants are suffering from the consequences of this pricing environment, and I believe this is largely an industry that's responsible to capital returns to investors. So when you think about what we've experienced over the last several months, you've really got the moderating of a very long bull cycle on residual values. It's moderating. It's clearly not a collapse. It's a moderation. When you combine that moderation and the cessation of rewarding the behavior of incredibly low fleet v (37:30) cost in the industry that rewarded the behavior of above average growth, when you combine that with a moderate slowing in GDP growth and Hertz's desire to recapture a maintenance of share, not a share growth but a maintenance of share, you can see there are lot…

We have a question from the line of Chris Agnew with MKM Partners. Please go ahead.

Thanks very much. Good morning. You highlighted three things that impacted total RPD. I think the Dollar Thrifty transaction day counting methodology, fuel-related ancillary and mix. I wondered if you could break those out separately for us. And then how do we think about those impacting for the rest of the year? Is there any seasonality to those impacts? Thanks. Jeffrey T. Foland - Chief Revenue Officer & Senior Executive Vice President: Yes. Good morning. This is Jeff Foland. So about 70% of the decline in RPD was related to industry pricing and the DTG days counting methodology that we have previously discussed before. Of the remaining 30%, it came in the form of a number of dimensions, a couple of which you have mentioned, the fleet mix change or the proportion of smaller cars that were rented on a year-over-year basis compared to the same quarter last year, customer segment mix and a small impact as we saw some softening in the corporate travel sector and that traffic was replaced with the other types of traffic that had slightly lower yield during the quarter. And then as you mentioned, the refueling-related ancillary components, which as fuel prices have dropped in the marketplace, the associated ancillary revenues with that have dropped as well. So that's roughly how it breaks down for the on airport business and for the off airport business we saw a somewhat similar mix as well.

Thanks. And can you touch on European book – a separate question – European booking trends and in particular international inbound and level of visibility you have at this stage for the summer peak? Thank you. John P. Tague - President, Chief Executive Officer & Director: Yes. I think it's too soon to tell really in that context. As we went through the first quarter, we really didn't see anything. Previous events such as were experienced in Belgium had turned out in retrospect to be more moderate than we thought. But we are watching given that this is a peak-booking season for the summer as that develops. So I think there's a moderate level of concern recently in terms of demand, particularly from the U.S. market to Europe, but nothing that we're prepared to extrapolate or that we believe can't be mitigated. Lawrence H. Silber - President & Chief Executive Officer, Hertz Equipment Rental Corp.: With respect to inbound into the U.S. from international locations, we saw modest growth in volume in the first quarter year over year. At this point in time, as John said, it's a little early to predict or project what that will look like for the remainder of the summer as we head into the peak. And we had similar pricing pressures on that business as we saw in the remainder of the portfolio as well.

Thank you.

We have a question from the line of John Healy with Northcoast Research. Please go ahead.

Thank you. John, I wanted to ask you a little bit about some of the comments you made on mobility and Hertz's role longer term. I was hoping if you could give us an update on partnership with Lyft what you're seeing in the Denver and Las Vegas market, and maybe how your thought process is evolving as it relates to that business. Additionally I was curious to know with the partnership that you have with Lyft, they've been in the market raising some capital and some new investors. Is that something you've thought about and is that something you guys have the option to participate in with Lyft? John P. Tague - President, Chief Executive Officer & Director: Yes. Certainly we have the option to participate in those markets. We've come to the conclusion that from a return for our investors on a risk-adjusted basis, these valuations have moved beyond us being able to have a strategic participation from that perspective. So we have no expectation that we would move forward with the consideration on that level. We do think that there's going to be supply partnerships and management partnerships. We've done pilots with Lyft as you know. Donlen is operating some fleet services with Uber, as we speak, around their own fleet in their lease portfolio. So we're committed to developing a profitable strategic partner relationship with these companies, and I think that those discussions are ongoing and have been for some time and we'll determine what the best outcome is. But, clearly, we're going to find a way to constructively participate in the segment's growth.

Great. And I wanted to ask two housekeeping questions. The $1 billion of EBITDA you're expecting on the rental car business this year, what's the expectation for full-year pricing in that guidance for U.S. RAC? And then additionally, any updated thoughts on how you're thinking about leverage the Hertz business post separation? John P. Tague - President, Chief Executive Officer & Director: So I'll answer the first part and Tom will answer the second part. So, look, we've been very clear that we've provided EBITDA and selective additional guidance. And that's because I think the one's ability to be passing around pricing impact is not terrific. Now, having said that, your next question is, well that sounds (46:39) come to an outcome. We have come to an outcome understanding the leverage we have across the business and our ability to mitigate risk as a result of that. Now, clearly, our guidance is predicated upon certain residual value outcome and an improvement pricing, but we're not left without levers to respond to both of those in our trajectory of cost savings in the rest of the business and that's how we've accommodated it. So we're intentionally not precise on that, again, not with an intent to be evasive or lack transparency. We just wanted the team to be driving accountability to the EBITDA outcome. We've certainly, I would say, suggest some improvement in pricing, but it doesn't suggest that we're going to be up year over two certainly.

Okay. Tom Kennedy - Chief Financial Officer & Senior Executive Vice President: And as it relates to the leverage question, John, as we indicated in our remarks we said previously, the leverage for HERC at spin we're looking at a 3.25x to 3.75x range. That's up from our previously discussed guidance that was updated with the capital markets environment of 3x to 3.5x. Our original target back in March 2014 when we first announced this spin was 3.5x to 4x. So it has moved around relative to the capital markets environment and the performance of the business obviously. The performance of the business, as Larry outlined, is improving, as are the capital markets, which are both positive indicators to allow us to move that expectation from 3x to 3.5x to 3.25x to 3.75x. And obviously we've made a lot of great progress on establishing the capital structure for both businesses and more will come out as we get closer to date, but we clearly will have an objective to use the proceeds in such a way that will allow us to achieve our goal to be 3.5x or less on the RAC leverage level by year-end 2016.

Okay. Thank you.

We have a question from the line of Afua Ahwoi with Goldman Sachs. Please go ahead. Afua Ahwoi - Goldman Sachs & Co.: Hey, hello. Thanks for taking my question. So just two for me really quick. First, I'm trying to reconcile some of the comment you made on the industry capacity and utilization, and maybe the answer lies in the type of car. But it strikes me as interesting that both you and Avis have reported improvements in utilization but both mentioned that (49:13). So, I guess, my question is where is that supply coming from or is it the type of supply that was available? And then the second question is just on the residual value. I noticed you kept your 2.5% decline forecast that you had indicated earlier. How does that feed into what we're seeing right now in current trends, which are obviously weaker than that, but does that mean it's temporary? Do you expect (49:40) company? Thanks. John P. Tague - President, Chief Executive Officer & Director: Yes. Relative to the first comment, look, until all fleets are tied across the industry and in fact until we're spilling demands. In other words, we're actually rejecting some demand, we're not getting pricing power as a participant or at the sector level. So I think that the approach to this issue has got to change to a willingness and a reward from having a little bit less than what demand ultimately calls for as opposed to a little bit too much. So, when that occurs, you'll see corresponding improvements. Until that occurs, we will collectively be frustrated. Tom Kennedy - Chief Financial Officer & Senior Executive Vice President: So, as it relates to residual, I think your question was related to the 2.5% and what are we…

We have a question from the line of Kevin Milota with JPMorgan. Please go ahead.

Hey. Good morning. A couple of questions here. One, if you could give us a sense for how booked you are right now in U.S. RAC for the second quarter and third quarter? Second question being that first quarter was down 10% on price, for the second quarter is the cadence going to be similar or is it kind of half that at down 5%, similar to what you achieved in the fourth quarter? Could you give us a sense for kind of what the next move is on pricing? That'd be helpful. Thank you. John P. Tague - President, Chief Executive Officer & Director: I can appreciate why we'd all like to know the answer to those questions, but we're not in a position to provide specific guidance there. One of the difficult things about revenue visibility in this industry is the extreme shortness of booking curve, which is partly a function of pricing structure and excess supply. I think it could be a much longer more indicative booking curve than it is, but for the time being most of that activity is incurring within 30 days of pickup. So, I don't know that – booking trends I would say are positive, but the data sample is small when you go beyond 30 days.

And we have questions from the line of Rich Kwas with Wells Fargo Securities. Please go ahead.

Yeah. Good morning. This is Ron Jewsikow on for Rich Kwas. I just had a question, has there been any pressure from OEMs to offload fleet or have you pushbacked at any time to do so? Tom Kennedy - Chief Financial Officer & Senior Executive Vice President: Hi, Ron. It's Tom. No, there hasn't been any pressure by OEMs to offload fleet. We're obviously monitoring inventory gains of all the manufacturers and perhaps we will be able to reach out when we see what might be building up of inventories of certain manufacturers (54:08). We obviously want to be careful. Generally, there's availability of compact and midsized for which we discussed earlier, which is something you're a little overweight in the first quarter, so we want to be cautious not to take fleet just for the simple sake of availability fleet. As John also indicated very clearly on the call, we want to be very disciplined in our fleet growth. So, even though there will be or there may be availability from time to time of different types of fleet, we would consider taking it at spot rate only if we can accommodate within our fleet plans, so we'll not be distracted in taking fleet for fleet sake because it comes at a marginal lower cost than our average fleet and therefore would take fleet. So, we'll be very disciplined from that perspective. But generally speaking, there hasn't been a large amount of fleet being made available for what we see in daily rental and the manufacturers have been very disciplined of what they offer and particularly, as we've talked about previously, the program car content has been declining on a year-over-year basis for model 2016 versus model 2015, and the pricing has increased. And we expect similar behavior for model year 2017 offers based on our preliminary discussions with our various manufacturer partners where program cars will continue to be difficult to be available and at higher costs.

Thanks for that color. And then on the topic of revenue visibility, how is the progress going on the implementation of prepayment options for customers? Jeffrey T. Foland - Chief Revenue Officer & Senior Executive Vice President: This is Jeff. So, we actually have some prepayment options in the marketplace today, which has grown significantly on a year-over-year basis. What you may be referring to is the ability to capture the payment card information upfront across brands, and the ability to offer various product offerings associated with that. We are on track to have that capability by midyear this year for a portion of our brand portfolio and will be filed with the remainder of our brand portfolio at a later point in time. So, once again, midyear we'll have the capability and at that point in time we'll start various in-market programs and tests.

That's very helpful. Thanks for taking my questions.

And we have a question from the line of Brian Johnson with Barclays. Please go ahead.

Hi. Yes. This is Dan Levy on for Brian. Thank you. First, I wanted to ask a question just on your purchases of fleet. Just given the pressure that we've seen in the small and midsized car market, have you been able to get any benefits within the cap costs to reflect the weak sedan pricing that's happening in the new retail market? Have you seen any of those benefits in your cap costs? Jeffrey T. Foland - Chief Revenue Officer & Senior Executive Vice President: We don't get into specific disclosure and particularly when we're in the middle of negotiations with OEMs on our cap costs year-over-year. But to be clear, obviously there have been residual pressures, and as a result, discussions have to start with our cap cost reduction relative to the residual aftermarket on those types of fleet. So clearly that's an objective, I'm sure, all the industry has as well as ourselves and I think the OEMs are understanding of that need and given the residual values of those types of fleet types declining, there has to be a similar decline of cap costs.

Okay, understood. And a question just on broader fleet industry capacity following up on what had been previously asked. I mean look, we saw in the quarter that in the first quarter that OEM new car sales into the rental industry were up 12% quite significantly and I understand that part of that is the offset you mentioned by quite significant sales into the used market. But could we just understand if there was an issue of excess fleet, wouldn't you have had any ability to delay or offset some of those purchases so that there would a net disposal? I mean, I guess this is more a question with regard to the broader industry, but we would just – would've assumed if you're having issues with excess fleet – if the industry was having issues with excess fleet, that some of those purchases could've been delayed or canceled? John P. Tague - President, Chief Executive Officer & Director: Dan, I think we've heard anecdotally that that may have occurred in some cases. Our fleet was down 6% in the quarter year-over-year. Tom Kennedy - Chief Financial Officer & Senior Executive Vice President: Yeah, I think it's – generally speaking from a fleet planning perspective, it's very challenging once you make a commitment to a manufacturer and you come up with a supply plan to materially move that out. So, I would not take so much focus on quarter-to-quarter, year-over-year adds or sales to rental car because, a) to your point, you're missing the disposal component of that equation, so you don't really know what happens to the net fleet for the industry; and b) it is more difficult to effectuate change kind of near-term quarter-to-quarter versus a longer-term horizon and a fleet planning perspective that daily rentals can then plan for and adjust for along in partnership with the manufacturers, who are relying upon a supply plan and a commitment plan and an order plan for their own planning in their own factory orders. So, I would not take too much credence into a 0.25 point estimate as an indicative issue that it does not appear to be addressing what we believe was to be an oversupply. I think it's a longer term horizon and again I think when one does that you're missing, to your point, the larger component of the equation, which is the disposal component, which we understand and you've probably seen this as well – it was very significant in the first quarter for all the dealer rental car companies. John P. Tague - President, Chief Executive Officer & Director: And I think, again – look, as Tom indicates, we were executing on a capacity fleet reduction plan that was largely determined last September/October.

Understood. Thank you.

We have a question from the line of Michael Millman with Millman Research. Please go ahead.

Thank you. I think you've indicated that over the last few years you've lost share on the airports. Can you talk to us about – to what extent you're trying to regain that share has contributed to what's going on in pricing; and also sort of related, can you draw, I guess, a line in the sand to say we will not rent below this price. We would hold it for another day. John P. Tague - President, Chief Executive Officer & Director: So, first off, I think we've been consistent for some time. We're not going to try and regain share through price. We are going to try and participate to maintain share. So, I don't think it would be appropriate to draw a line between those two outcomes and I think that's evidenced by where you've seen our growth both in capacity and transactions vis-à-vis other industry participants. So, that would be our view in that regard. I don't think it's helpful to be dogmatic about where variable costs are vis-à-vis the use of fleet. I think that it's appropriate to observe; some activity in the market at times seems like it may be below variable costs, but we all have our own perspectives on that. So, no, we would not establish a transparent minimum.

Okay. Thank you.

And our last question comes from the line of Ben Clifford with Nomura. Please go ahead.

Hey, guys. Good morning. Just one question. It looks like your cash tax guidance for 2016 is definitely elevated, it may be the highest levels we've seen over the last five years or six years. Can you talk about what's driving that? And what the outlook on that cash tax number could be post 2016? Tom Kennedy - Chief Financial Officer & Senior Executive Vice President: Yeah. No problem, Ben. So, I would say this year's cash tax guidance is somewhat higher than what we would say the normal rate would be to some potential expectations on where we might have some tax cash exposure in certain foreign jurisdictions on some historical audits that are ongoing. So, it's a conservative assumption that we might have to settle some historical audits. It is not related to any change in our view of being a federal tax cash, taxpayer in the U.S. and we don't expect that to happen any time based on some of the bonus depreciation extension prior to 2018 and 2019 at the earliest. So, it is in no way related to any changes in fleet plans that folks have had concerns about or a mismatching of the LKE relative to fleet growth. It is simply a function of our conservative view on potential settlement of some tax disputes in some foreign jurisdictions.

Great. Thanks. And then final question, how much of your disposals in Q1 were program cars versus at-risk cars? Tom Kennedy - Chief Financial Officer & Senior Executive Vice President: So, we didn't disclose per se our total disposals, but we disclosed a similar number of cars in Q1. I know the follow-up question which I will just anticipate and answer directly is what percentage of your risk cars you have disposed off relative to your expectations for the year? Through the month of April, that will be in excess of 40%. So, we did have a fairly aggressive disposal. And again, it was similar to last year when we were going through the fleet rotation overall disposal. So, as you can see from just that basis, we were pretty aggressive on managing fleet despite not going through a large fleet rotation. But our overall risk disposals at least through the month of April, which in my latest data point would represent about 40-plus percent of our overall expected disposal of risk fleet for the year.

Great. Thank you.

And there are no further questions at this time. Please continue. John P. Tague - President, Chief Executive Officer & Director: Thanks Linda. John here. I think we are clear that we have a path to deal with both the perceived and real threats to value as opposed to a path to seize the opportunity we have as a company around our internal ability to generate value in execution of excellence as well as our strategic ability to position the company to be more relevant in a rapidly changing marketplace that we feel clearly provides more value than it represents risk. And we'll continue to report on our progress as we go quarter to quarter and we thank you for your engagement and support.

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