Welcome to Hertz Global Holdings Second Quarter 2025 Earnings Call. [Operator Instructions] I would like to remind you that this morning's call is being recorded by the company. I would now like to turn the call over to our host, Johann Rawlinson, Vice President of Investor Relations. Please go ahead, sir.

Good morning, everyone, and thank you for joining us. By now, you should have our earnings press release and associated financial information. We've also provided slides to accompany our conference call, and these can be accessed through the Investor Relations section of our website. I want to remind you that certain statements made on this call contain forward-looking information. Forward- looking statements are not a guarantee of performance, and by their nature, are subject to inherent risks and uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of today's date, and the company undertakes no obligation to update that information to reflect changed circumstances. Additional information concerning these statements, including factors that could cause our actual results to differ is contained in our earnings press release and in the risk factors and forward-looking statement sections in the filings we make with the Securities and Exchange Commission. Our filings are available on the SEC's website and the Investor Relations section of the Hertz website. Today, we'll use certain non-GAAP financial measures which are reconciled with GAAP numbers in our earnings press release and earnings presentation available on our website. We believe that these non-GAAP measures provide additional useful information about our operations allowing better evaluation of our profitability and performance. Unless otherwise noted, our discussion today focuses on our global business. On the call this morning, we have Gil West, our Chief Executive Officer, who will discuss operational highlights and our fleet. Our Chief Commercial Officer, Sandeep Dube, will then share insights into our commercial strategy followed by Scott Haralson, our Chief Financial Officer, who will discuss our financial performance and liquidity. We are also joined by Darren Arrington, our Executive Vice President for Revenue Management who will be available to answer questions during the Q&A session. I'll now turn the call over to Gil.

Thank you, Johann, and good morning, everyone. First, I'd like to thank the team at Hertz for their hard work and dedication over the last quarter. Our people continue to lead this transformation, driving execution, improving operations and strengthening performance across the business. When we introduced our Back-to-Basics Roadmap last year, we didn't just make a strategic pivot under new leadership. We began a multiyear journey to reset the foundation of the company and position Hertz for the future. This transformation isn't about broad strokes. It's about driving fundamental change starting at the core of our business and rebuilding it from the ground up. At Hertz, we believe transformation is earned. We know that through disciplined execution and operational excellence, we will drive tangible results for our customers, our team members and our shareholders. That's why we've been transparent about our goals, clear about our progress, grounded in the details that drive performance. And this quarter, we delivered our best set of results in nearly 2 years. For the first time in 7 quarters, Hertz delivered positive adjusted corporate EBITDA, a nearly $0.5 billion year-over-year improvement. We exceeded our North Star target for depreciation per unit, achieved the highest second quarter retail vehicle sales in 5 years, and had our highest fleet utilization in nearly 2 years. These gains supported $2.2 billion in revenue for the quarter and underscore our ability to sweat the assets and do more with less. Importantly, we also improved our direct operating expense per transaction day despite lower year-over-year volume, a clear sign of growing operational leverage. What's behind that progress? The same three financial pillars we laid out at the start of our journey, disciplined fleet management, revenue optimization and rigorous cost management. Powered by our people, technology and processes. These are the fundamentals…

Thank you, Gil. Good morning, everyone. On the commercial side, we are focused on the foundational improvements that drive RPU towards our North Star metric of over $1,500. These efforts will directly enhance profitability and strengthen our position for future growth. In Q2, revenue was down 7%, in part due to, as Gil mentioned, running a smaller fleet down 6% year-over-year. In that environment, we built momentum on demand generation and utilization but faced challenges with pricing. Going forward, we have a clear commercial strategy to unlock the value where we see significant potential. Our strategy begins with our ability to sweat our assets and drive more days for a given fleet size which you've heard is yielding results. The utilization improvement in Q2 was driven by our world-class tech ops team, reducing out-of-sales vehicles, improved demand generation from our commercial and operations teams and better alignment of capacity and demand, driven by our fleet planning and revenue management teams. This utilization performance also supported a sequential improvement in year-over-year RPU even within a competitive pricing environment. Looking ahead, we believe pricing represents one of our largest opportunities to unlock further value. To capture it, we are executing against the detailed plan. starting with the transformation of our revenue management platform. Our current system originally implemented in 2004, relies on outdated forecasting methods and batch-based optimization lacks real- time data and is not integrated with adjacent functions like capacity planning. It also fails to reflect localized market dynamics or respond to real-time demand signals and is over reliant on human judgment. To change that, we are several quarters into a multiyear partnership with Amadeus, a global travel technology leader, to replace our legacy RM system. The new platform will introduce sophistication like that's seen in the airline industry including real-time…

Thanks, Sandeep. Good morning, everyone. Great to have you on the call today. Let's start with our second quarter financial results. Total revenues were $2.2 billion, and adjusted corporate EBITDA came in at a positive $1 million, which was consistent with our guidance and an impressive turnaround from a loss of $460 million in the prior year, with a similar improvement in adjusted operating cash flow. It's a clear indication that we are making significant progress. While we've taken a moment to celebrate this milestone with the team, we're already focused on the next one. Fully aware that continued progress will require sustained effort and execution. So a big high five to the team for the accomplishments so far, but now it's on to the next play. Looking at our key operational metrics, RPU was $1,400, down slightly year-over-year and flat when adjusted for our change in fleet mix. Vehicle utilization reached 83% in Q2 marking a 300 basis point improvement year-over-year. This improved performance highlights our ability to optimize fleet deployment while maintaining service levels. While there is solid demand generation, execution of our pricing initiatives will unlock material margin expansion, underscoring the strength of our fleet strategy and a favorable residual value environment, DPU came in well below guidance at $251 per unit per month, exceeding our North Star target by 16%. This is a meaningful improvement, both sequentially and year-over-year. On a gross basis, DPU was around $280. Net gains on sale represented about $30 per unit per month driven by strong residual values achieved through our optimized disposition channels and our continued disposal of older vehicles. We expect gross DPU to remain under $300 for the rest of the year. We don't expect to have the same level of gains on selling in Q3 and Q4…

Thank you, Scott. To reiterate, this quarter, for the first time in nearly 2 years, we delivered positive adjusted corporate EBITDA and almost a $500 million year-over-year improvement. Alongside record retail vehicle sales, stronger DPU and meaningful gains in utilization, customer satisfaction and cost efficiency. These results show we made real progress and are just to stop over on a longer journey. We are clear-eyed about the work still ahead and just as confident in our conviction about where we're going. Hertz has the scale, brand and operational expertise to lead again. With sharper operations in a world-class team, we're building a business that's not only executing against the North Star metrics but positioning to lead in the next era of mobility. And we're focused on getting it right, and our playbook disciplined execution and bold transformation go hand in hand. Our momentum is real, vision is focused. Our team is united in building the company fit for the future without trying to jump ahead of it. With that, let's open it up for questions. Back to you, operator.

[Operator Instructions] Our first question will come from Chris Woronka with Deutsche Bank.

Gil, maybe we could start off with a very kind of a longer-term question, that would kind of be how you guys envision kind of in the future of AVs and robotaxis and things like that?

Yes, sure. Well, Chris, thanks for the question. Yes, well, first, Hertz certainly has a role in the future of AVs and robotaxis. I'll just say I and others on the team know this space. The tech works. Road safety will be dramatically improved with AVs. And the way I think about it is the cost of AVs decrease, the economics will be transformational. So we've got a significant role to play in that future of mobility and partnerships are just part of our DNA. This is a huge -- look, I think the whole robotaxi market is a huge TAM, right? And it's not a winner-take-all game here. So we're one of a limited number of companies that have all the necessary ingredients to be a major player in AVs. So as I think about it, we've got an iconic brand. We got a global operating footprint, driving operational excellence. We got advanced maintenance capabilities, of course, large fleet management skills. And we've also got the experience managing EVs because in all likelihood, all AVs will be EVs. And then, of course, infrastructure, but more importantly, we're an asset-heavy business, and we have vehicle financing capabilities. So bottom line is just owning and operating large fleets of vehicles, that's our core business. And as I see it, that's the foundation for AV business and mobility in the future.

Okay. As a follow-up, I was hoping we could maybe dig a little bit deeper into the RPD. And I know you like to sometimes look at it more on an RPU basis. But just on RPD and kind of what was printed in Q2 and your commentary, is there any way to break it down how much of that is mix versus kind of what's been going on in the market? And do you think that breakdown or split is applicable to the back half of the year as well?

Yes. Chris, thanks. This is Sandeep here. And I know you said we like to focus on RPU versus RPD. Let me actually first start with RPU, and then I will get back to your question around RPD for sure. So just overall, revenue is on an encouraging path, right? Q2 had a sequential improvement in year-over-year revenue by 6 points, while also improving RPU by 1 point. And we manage our revenue on a focus of our North Star metric of RPU, balancing RPD and UT at the local market level, similar to what the airline industry does where RASM is the key unit revenue outcome, balancing yield and growth. So that's how kind of we manage it all. Now when you break down Q2 in itself, RPD for us in isolation was down about 5% and would have been about 2 to 3 points better normalizing for change in fleet mix. Now we all know the market was pretty challenged in Q2 overall. And I'd say the overall market pricing was down mid- to high single digits as such. And there's a lot of work there that we have done in terms of improvement in our segment mix, improvement in the way we do -- we drive our revenue management strategies and tactics to extract and monetize more from the demand that we were generating. So I'd say we were able to overcome a decent bit of what was happening in the marketplace through the foundational improvement of how we monetize demand. I think looking ahead, as we talked about in the -- a few minutes ago, I think the biggest opportunity for us on a year-over-year basis is going to be how we price, right? We have a pretty, I'm going to use the term antiquated revenue management system. And it puts a lot of load on our revenue management system in making the right calls. And I think over the next few quarters, I know this is a multiyear journey, but it's going to be material in terms of the year-over-year accretive nature of what we are trying to do here. So I'm actually super excited about the journey forward, and so is the entire commercial team here.

Your next question will come from Ryan Brinkman with JPMorgan.

I didn't hear much discussion of recalls in your prepared remarks and your utilization rate was very high during the quarter, which would be hard to achieve in the current recall environment. So I'm curious if you might have been disproportionately less exposed to the vehicles that were recalled or maybe the younger nature of your fleet now post rotation might have left you less exposed? Or just how recalls you think impacted the quarter and then what your outlook for their impact might be going forward?

Yes, thanks. I'll take that, Ryan. Thanks for the question. Yes, I think a couple of pieces to think of. First of all, for the quarter, for Q2, we really didn't have much of a headwind for recalls. It's really Q3 is where I think we're going to experience the impact. So we're -- as I think Sandeep mentioned, we're about 2% of our vehicles currently on recall. That's about 1.5 points higher than normal. Let me say that to kind of give you a sense of that. So we've seen a rash of recalls as we've entered the summer period. And -- I mean, as you know, we're implying, we don't have the ability to rent a car when it's on recall. So we don't do that. But I think what I would say in terms of how we've been managing this, just to put it in perspective. Our tech ops team, first of all, is the best of the best. They are very proactive to identify and mitigate any upcoming vehicle recalls before they result in a vehicle out of service. So much of the impact that we see today is where an OEM does not have the fix for the recall develop candidly or the parts aren't available. So those are the kind of two pieces that we're working our way through. And then I'll just say not all OEMs are created equal in this respect, right? So mix is an important part of it. But you're right, I think the younger fleet also has less exposure to recalls in general.

Okay. Great. And obviously, great performance on depreciation per unit during the quarter. Thanks for the breakout of how much of the gains on sale contributed and how we might expect that to go forward. But I'm curious on the contribution from the higher prices achieved by selling more through the vertically integrated retail channel. Like how much of the higher sales volume at retail, the second best in 5 years was driven by a higher level of dispositions generally as maybe you were more successful in securing 2025 model year vehicles earlier because you're reducing the size of the fleet year-over-year versus how much was maybe driven by some initiatives on your end, perhaps structural in nature to drive a higher percent of dispositions through retail going forward?

Yes. No, thank you. I think it starts with our strategy, first of all, because that frames out kind of all the actions we've been taking to drive our depreciation down, and that includes the core of your question, too. So again, we've been really focused on trying to develop a cohesive end-to-end strategy. We call it internally, Buy Right, Hold Right, Sell Right, just to frame that out. And each of those three pieces have a lot of depth to them. But as we've been executing the strategy, first of all, on the buy side, you're right. I mean, we were -- we recognized, of course, early that we had a lot of fleet headwinds, and the team has done an amazing job kind of turning those headwinds into a real competitive tailwind now for us. And it's part of our fleet rotation strategy. But also as we bought vehicles in 2025, we tried to align our buys with the mix that our customers book to as close as we can. But also, we were really rigorous and far more analytical about our approach to the buy-side economics with an eye towards when we sell the vehicles, what will that look like. And then, of course, our objective here is also to refine our hold period to optimize our depreciation and return on those assets as well. But on the sales side of the equation, really important as well that we get more net out of what we're selling, right? And then it's really the retention value that we're trying to manage from when we buy the vehicle to when we sell it. And that's, of course, when we sell it, how much we sell it for, it's key in that. So the retail channels are the most accretive…

Your next question will come from John Healy with Northcoast Research.

Gil, wanted to ask a little bit more on the fleet side of things, particularly as you discuss the relationship with Cox Automotive. I've always thought about them as more of on the wholesale side of things more so than retail. So I was just hoping you could explain kind of what you're doing with them and how those cars are getting retailed if it's to dealers or it's direct-to-consumer? And does this represent maybe a departure or a change in the relationship that you had with Carvana?

Yes. No, thanks. Great question. First of all, Cox is a wonderful partner. I'll start there, known them for decades. In fact, I mean, even when I was a kid, I would go buy Autotrader, when I was 18 years old to look for cars to buy. So I've got tremendous respect for the company. As we partnered with them, what I will say is in terms of retail sales, in particular, the opportunities that we've got with them is one I mentioned earlier is digital transformation of the sell experience. So rather -- the traditional model of selling cars, putting them out on a retail lot, coming in, back and forth on price, reach a deal and then having to paper that up, right? If you look at that whole process, probably the most agonizing part is all the documentation at the end, you've got to fill out and go through. We've worked with Cox to really digitize all that. So that's important on a couple of levels. One, it improves the customer experience, of course. But then it also allows us then to open up a much larger market of car sales that today doesn't -- or in the future doesn't require that physical footprint at lots. We can advertise and transact digitally then, which is really opens up the opportunities for us. And there's a lot of other dimensions to that, too. But that's the ultimate objective. Our rent-to-buy program also plays a role in that where you can rent cars, experience them and then we can transact, right? So all those things are geared around that. The other thing Cox has done for us is on our pricing strategies, right? So they've got tremendous data, of course, wholesale, as you mentioned, but also retail data because they've got -- Autotrader is just one example, but they've got a lot of dimensions in the retail space. So they've helped us leverage AI pricing. So we really know at a make, model, trim, market location level, what the retail market is and kind of what the elasticity curve is in terms of price and time to sell the vehicle. So all of that then we ingest into our systems to be able to price vehicles optimally. So again, they're a great partner, and there's a lot we're doing with them.

Great. And then, Sandeep, I just wanted to ask one follow-up question. I think you -- when you were talking about RPD performance, you kind of -- I thought you said pricing was down kind of the industry mid- to high single digits. I think we saw the pricing for Avis's kind of a bit lower than that or a bit better than that rather. So when you kind of have that view, is that suggestive of like a big change in what you're seeing out of enterprise? Or just any color there?

Yes. I think when we look at year-over-year pricing for a specific brand, you have to look at what strategy they employed last year versus this year, right? There's generally -- there's that effect in play as well. So I just want to put that out there. And then the other thing just to mention is, overall, our focus is on RPU, right? And for us, it's finding that balance between UT and RPD at a local market level. And the way we are operating on that this year is different than how we executed last year. And that's being represented in the RPU performance that we're driving. So again, similar to the airline industry, I'm going to say that we're going to be focused on RPU and finding that balance at the local market level. The -- so I'll leave it at that.

Your next question will come from Stephanie Moore with Jefferies.

I wanted to follow up on maybe the updated EBITDA outlook for the full year. And if you could talk a little bit about what drove the slight adjustment of going from maybe just slightly below breakeven versus slightly above before.

Yes, Stephanie, this is Scott. I'll start. I'm sure Sandeep and Gil want to chime in, too. But I think what we're really talking about here, we kind of hinted at this in the prepared remarks, was that in our base assumption really through the summer and into the back end of the year was based on a certain curve of sort of pricing moves. We did see a bit of a delay in that. Honestly, the Q2 pricing, as we talked about, wasn't as strong as we had hoped, but we're starting to see cracks in that as we head into August and into the meat of the middle of Q3 and into Q4. So I think what we're talking about here is that, that sort of delayed pricing move has caused the math to come down slightly. So I think we're just sort of revising the volume of kind of what we thought around pricing and total revenue for the back end of the year. But I think Sandeep kind of hinted to a lot of the green shoots that we're seeing that do give us a little bit of optimism. But like I mentioned, limited data set so far, so we're not ready to extrapolate that throughout the back end of the year yet.

Okay. Understood. And then it would be helpful if you could discuss to the best that you can about the overall demand environment that you've seen -- that you saw in July, maybe thus far in August? And then maybe any commentary around forward bookings indicating the health of just the overall travel market.

Yes. This is Sandeep here. I'll cover that. So I think what we generally saw, specifically in the U.S., if you look at the segments that had shown a lot of decrease in the first half of the year, and I'm referring to corporate, I'm referring to government, and I'm referring to the high RPD inbound, U.S. inbound segments, those were on a declining trend through the first half of the year for reasons we all know. They -- those segments hit a, I'm going to say, plateaued out in June. And since then, we've seen an improvement in all three of those segments, right? The corporate segment was down mid-single digits. We saw a good 3 to 4 points improvement in July from a demand perspective. The government sector, again, plateaued out and down 25% to 30%. And we've seen -- that was in June. And then we saw about a 5-point improvement in July in that segment. And I'd say the inbound segment, which -- where we've actually seen positive demand from APAC and Latin America, but of course, reduced demand from the EMEA region in the first half of the year. We actually saw some improvement in EMEA in July as well. And net-net, inbound was actually positive by 1 point to 2 points from a demand perspective in July. And I'd say those trends, when we look at the early part of August, continue to improve. So I think the demand profile as such that's coming in continues to improve. Now going to the second part of your question around forward bookings, we are -- as I mentioned earlier on, we are booking ahead of our planned fleet capacity. That's indicative of two things. One is the improvement in demand that we see. Again, early days for that. I do want to say it's early days for that. We need that to -- that trend to continue on, but also a change in some of our RM strategies and tactics as we keep on refining the way we foundationally do revenue management. But overall, I'd say increasingly optimistic, but the story still has to be told, right? We need to see more progress.

I guess just to put that all together, so it sounds like demand environment, optimistic, stable, maybe a little bit better. As you noted, pricing environment maybe a little bit worse than had expected. And then how would you layer in maybe the overall used price environment and expectations around vehicle gains and DPU versus expectations to start the year?

I'll -- this is Sandeep here. I'll just mention on the pricing front, just one commentary. I think the pricing environment, the way I would characterize what we've seen so far is a delay in the improvement, right? We expected when we met in Q1 during the earnings call, we had expected pricing to improve through summer. That element has just been delayed. But then now we see progression, narrowing of the gap on a year-over-year basis on that front. So I think it's a delay in that trajectory versus worsening. So I just want to ensure we communicate that.

Yes. And then just to follow up on the other side around the fleet. I think the assumption going forward is that we generally expect stable residual values. We talked about gross DPU being somewhat similar in Q3 and Q4 is what we produced in Q2. Probably won't have the same level of gains, less volume will be sold through the periods going forward as we did in Q2, slightly less. But all in all, we're expecting pretty stable residual values as we go forward.

Your next question will come from Federico Merendi with Bank of America.

I just wanted to ask you a question regarding liquidity. Could you help us to understand to bridge liquidity from current level to end of year, given that, from my understanding, the second half of the year is a little bit weaker than previously expected? And also, could you give us some more clarity or early comments for 2026, given the potential $800 million, $900 million headwind from the debt repayment and the Wells Fargo liability?

Okay. Let me start here in '25, yes, I mean, slight revision downward in the back end of the year, but we will be cash flow positive in the back end of the year. We expect that to be the case as the business gets better, produces better operating cash flow. The sort of fleets -- the fleet ins and outs in the period are different in the back half than the front half. So we expect to end the year at a pretty sizable liquidity balance. I'm going to stop short of predicting the balance just given the fact that there's a number of components here that may be in and out. I think the larger point is that we're sort of beyond the levels of liquidity that sort of caused concern in the front half and even last year. I think the business is in a better spot today. So we're going to think about liquidity as sources and uses of what the business can produce, what our obligations are, how we think about the continued fleet rotation, the fleet size next year. All these inputs will drive where we may end up at the full year. So I'm not going to predict an outcome. But you will see a higher cash balance as we run through the year in preparation for 2026. So I'll sort of pause it there for '25. And as '26, maybe refresh me on your question for '26 real quick.

No, I was just...

On the debt maturities, was it?

Yes, debt maturities...

Yes, okay. So debt maturities -- yes, sure. Sorry about that. The debt maturities in the Wells Fargo, obviously, we talked about the delay from the Supreme Court, whether or not to hear the case. We'll figure out where that ends up. And we've sort of earmarked funds for that internally. So we mentioned on the last call that we would end up with a little bit higher than $1 billion or right at $1 billion. We exceeded that target here, excluding the sort of Wells Fargo potential. And then as we head through next year, there's a lot of flexibility to address the 2026 maturity. It's a December 2026 maturity. We have a lot of flexibility with our own cash production and within our own capital markets activities that are possible for us. Obviously, we had an ATM that we launched in May of last year that we did not execute on in the quarter. And we have that capability as a strategic opportunistic capital raise possibility. And there's other mechanisms that we have today that we probably didn't have a year ago. So we have a lot of flexibility in how we can address those things in the future.

And I just wanted to ask a question on the RPD and DPU. So DPU came out -- came down nicely. And part of that, from my understanding is the fleet mix changed. How does that fleet mix change impact on the RPD as well? Because I'm thinking that, let's say, you downsize the kind of vehicles that you have in your fleet, I would assume that consumers -- customers won't pay the same RPD for those vehicles.

Yes. So I think the direction we are going on this front is essentially ensuring that customers have a certain booking behavior and ensuring that the -- from an economic perspective, the best decision for us is taking a look at this from an EBITDA perspective and saying, if we buy the right car class mixes that match up with the customer booking behavior, then that's a better outcome financially for the organization, right? And so that's the way we've aligned it. The -- one of the metrics that gets impacted in that strategy is, of course, RPD because you're absolutely right, right? The per day rate that a consumer pays for a higher-class vehicle, or a larger vehicle is more than that of a smaller vehicle. But net-net, financially and economically, this is actually a better decision for the organization, and that's why we have aligned in that direction. So we are prioritizing EBITDA over RPD and taking that decision.

Your next question will come from Ian Zaffino with Oppenheimer.

This is Isaac Sellhausen on for Ian. I was just wondering if you could provide a quick update on Dollar and Thrifty. Maybe if you're seeing any type of trade down to those brands or higher growth in them? And then maybe as a bigger picture question, is the goal still to drive kind of higher rate in those brands?

Yes. So I'll first say that our goal is to drive higher ARPU for every brand, right? So that's the objective as an organization. So we'll always be on that journey. I think what we've actually seen, and this is based on the hard work the entire organization is doing is actually -- if I look at the overall mix between last year, compare and contrast to this year, our mix of our premium brand, Hertz is actually the one that's growing, and that's the direction we want to keep going. That's the part of the business that I'm going to say is more margin accretive and it represents the premiumness of the Hertz brand that is a strong pull for our consumers. That being said, Dollar and Thrifty have its place because there are consumers that need that good combination of value and experience. And so we'll always have the Dollar and Thrifty brands that cater to that consumer base. But overall, as a business, we have shifted more towards Hertz.

Okay. And then as a quick follow-up, just on the 2026 year buys. Obviously, a lot going on in tariffs and supply chain delays, I guess. When would you typically be making those forward vehicle purchases? And then any thoughts on the anticipated DPU for those as well?

Yes. No, thanks, Isaac. I'll try to respond. Yes. What -- how I would describe it is after much delay due to the OEM supply chain disruptions, the model year '26 vehicle buys are starting to build momentum. And -- but we remain very disciplined to ensure we achieve the economics necessary to sustain our North Star DPU target and mitigate, of course, any residual value risk in a tariff type environment. So I'd just say we're pleased to see where the unit economics and volumes are beginning to line up for the model year '26s. And of course, the accelerated model year '25 buys that we did and our fleet rotation, it really gives us a lot of flexibility to manage that bridge. But yes, we're finally -- while it's been delayed a number of months, I think everything is building momentum on that side now.

Your final question will come from Dan Levy with Barclays.

I wanted to first ask about your views on future fleet size because we've had some fleet shrinkage here, and I know that that's more strategic than anything else. But how much more you think you need to shrink the fleet from here? And then how does that play into achieving your North Star target on DOE given you're not going to have maybe the same scale benefits with a smaller fleet? Can you still get to that low 30 DOE? And what's the timing on that?

Yes. No, thanks, Dan. Great question. I'll just start by saying we want to grow profitably, start there. And candidly, we have had to shrink the fleet in order to grow again because the fleet itself was the biggest headwind we had. So we had to rotate it through, get to our [indiscernible] number targets and North Star targets and basically create a set of assets, then it's the foundation that we can build and grow from, right? So that's been the strategy. I think as Scott and Sandeep both mentioned, I think on a relative year-over-year basis, we're going to keep the fleet down similar amounts to what you saw in the quarter through the end of the year. But we do have the flexibility to grow as we move forward. We also want to make sure that as Sandeep mentioned, we're growing our demand through also more diverse revenue channels. So we're less concentrated at the airport. Two areas have done a great job for us. The off-airport and our mobility businesses are really starting to grow. So we're happy about that. But there are -- what we really want to do is create multiple channels of revenue growth so that we can grow the fleet and ultimately our profitability. And that's been the kind of underlying strategy of everything we're doing. So as we move forward, that's the way we're looking at it. Do you want to add anything to that, Scott?

No, I think that's good, Gil.

Okay. Great. Second is a question on balance sheet and cash. And first, maybe you could address -- we saw -- you issued the ATM last quarter but looks like you didn't actually execute any stock. So maybe just explaining the plan on equity issuance. And then maybe just like a bigger picture question. You're sitting on $0.5 billion a year of non-fleet interest. And I think the challenge is there's still maybe a bit of a ways to go before you're hitting free cash flow breakeven and can start to pay down some of that non-fleet debt. So what is the plan to deleverage the non-fleet debt? Is it just going to be the old-fashioned raise your free cash flow, pay it down? Or are there other options as far as potential equity issuance?

Yes. Dan, great question. Yes, I mean, look, there's a couple of facets to this. I think as we go forward, obviously, the first step in the transformation is getting the business to produce operating cash flow, positive free cash flow for the business. That's the first step in the deleveraging plan, and it will be a key contributor to it. Obviously, as we think about speed and utilizing equity in the business, equity is going to play a role. We talked about the ATM that we launched was the first foray into using equity as a longer-term way to deleverage the balance sheet, and that's the plan. And we'll chip away at it. It's not going to happen overnight. But I think as the business improves, you'll start to see that sort of house of Hertz get built. And we'll use free cash flow, we'll use equity. We'll use better ways to refinance. We'll use some different ways to optimize the balance sheet with the ultimate goal of reducing that non-fleet corporate debt. I mean we all are very well aware of the amount of interest we pay every quarter from that. So something that is at forefront. But it's a longer-term plan that will happen over time. Operator, I think that's all the questions.

This concludes the Hertz Global Holdings Second Quarter 2025 Earnings Conference Call. Thank you for your participation. You may now disconnect.