Hertz Global Holdings, Inc. (HTZ) Earnings Call Transcript & Summary

Today. I'm Chris Woronka, Deutsche Bank's lodging leisure analyst. And for our next panel, our 12:10 Eastern, we have Hertz Global Holdings. We have CEO, Stephen Scherr, here next to me. And we're -- the format of this is, I think we described, is going to be more of a fireside chat. So I want to go ahead and jump into some questions, and let's get to it. So Stephen, thanks for joining us today.

Thank you, Chris. Thanks for having us.

Yes, you bet, glad you being here.

So first question, look, maybe we can start off very high level. And what Hertz's macro view of the world? And what are some of the factors that are likely to impact travel over the next year or so?

Sure. Well, I think as we and others in the travel space have talked about, the macro at the moment is quite positive and remains positive. You've heard from the airlines, you've heard from the hotel chains, all of whom are reflecting kind of a very consistent message, which is that consumers are skewing toward experiences, perhaps at the expense of or certainly instead of hard good purchase, we're seeing exactly the same. Our forward bookings, which really give confidence kind of 2 months forward, are quite positive and reflecting, for example, a very positive return of inbound travelers to the United States, which has been the slowest of the segments to sort of come back. That's a very positive element for Hertz in that these are customers that typically pay very attractive rate and our purchases of value-added services. So the RPD around that group is positive. And just anecdotally, we're seeing non-U.S. travelers inbound to the United States, particularly to South Florida over Christmas and equally to California at running twice what we saw last year. Now the interesting thing -- and you and I were having a bit of a conversation before we got started here. I'm always trying to sort of look at as long a forward booking sort of pattern as I can. Obviously, we're shorter, as I said, at about 2 months. We're in a late booking cycle. Our forward bookings look quite good. You can then look at the airlines. You can look at the hotels who are longer than we are. One interesting thing I'll comment on, again, to reflect the strength that we perceive in the travel space is conversations I've had with CEOs of some of the cruise lines. This is an element of the travel segment that has long -- the longest dated, if you will, booking, especially when you look at some of their elevated premium brands, which book a year out, and require quite a substantial deposit, down. And that, to me, is corroborating evidence of the continued strength that we see in the consumer who wants to buy and purchase in the experience. I'd say also kind of away from just baseline demand, the pattern of consumption around travel is changing, not just in leisure, but equally in corporate. I'll give you 2 sort of pieces of evidence around it. On the leisure side, we're seeing what I would describe as kind of secondary vacations, okay, playing out in ways they hadn't before. What I mean by that is people always took their kids away, they went to Disney, they went elsewhere, Christmas, Easter and the like. We're now seeing elevated bookings around Veterans Day Week or Columbus Day week in ways we hadn't seen before, meaning people are using the ability to maintain their at-work status though away from the office and are finding themselves in a more flexible position to take the family on vacation, yet still work from outside the office. On the corporate side, we have been seeing corporate bookings extended in duration by about 1.6 days. So what's happening? What's happening is take a lawyer in Chicago has a business trip in Los Angeles. That business trip would have been Tuesday, Wednesday, Thursday. As a lawyer, they would have been on the red eye back in the office on Friday. They're not doing that now. They're working remotely on Friday. They're extending through to the weekend. People sort of coined all sorts of terms around this. But the combination of business and leisure is very positive for the rental car industry and equally for hotels because that Friday, Saturday and Sunday are 3 more days we have on that person's rental that we hadn't had before. Long way of saying, our macro view on where things stand continues to be positive. And I'd say outside the narrow window of how we in the travel space look at this, there's evidence of sort of economists, including those that might form or place of employee, Goldman Sachs and JPMorgan, sort of talking a more bullish game on where the economy is, Bank of America on their earnings, reflecting positively on the state of the consumer. And I think people need to be careful even in the hard goods space that they're not misreading or over indexing on one particular retailer or another. Just witnessed what [Lowe's] reported as being quite positive in terms of thinking about the broader economy and what's out there. So that's my view. I would be and remain quite positive on the outlook for travel broadly.

Great. Great. How do you think this industry generally maybe Hertz more specifically have positioned themselves to deal with a potential downturn? I know prior commentary is very positive, but we don't know everything that might be coming down the road. And Stephen, you weren't in this industry in 2009, but I mean folks do want to know what would be different this time around in terms of positioning.

Sure. Well, look, we're in the business of managing risk. And notwithstanding my comments, which are quite positive on the forward direction, you always need to ensure that the company is positioned to sort of adjust itself should demand fall off. The single biggest lever we have to play is fleet, meaning if there is slower demand, we need to ensure that we have the fleet rightsized to sort of contemplate a continued focus on ROA, margin and higher utilization. My own take on this, and I've talked about this on the 2 prior earnings calls, is that relative to where this industry was before and where it was, was we buy fleet and then we find demand, which is kind of a bad sequence because, inevitably, what you do to find demand to the cars that you've taken in is your lower price. By converse, my view on this, and again, I've said this, is we need to look at the demand curve and fleet inside that demand curve, meaning we need to look and see where our forward book of business is expected to be across a range of segments and then look to take on fleet. For me, the way to do that and the way we would do that in the context of a softening of the market is fundamentally, we're a buyer of new cars. We will continue to be that. It's a better customer experience. It's a lower maintenance cost, et cetera. But I think the used car market has been viewed probably less significantly than it should be, and then we are, as kind of the place for you to play on marginal demand, higher or lower. You can look to that market as being quite liquid and sell into it to the extent your fleet is higher relative to where the demand is, and equally to the extent that you see demand play to the higher side than perhaps where expectations were. That can be your marginal source of cars. If we take new fleet at 80% of what we need, that 20% can be sourced in the used car market. And obviously, this is the positive side of where residuals have gone to the extent that we can source those cars at very attractive prices. And by the way, we can get people in those cars, renting them kind of inside 30 at 40 days, which is a very quick turn. So fleet is the single biggest lever that we can play. I would say also, we need to and we are focused on sources of demand for our product that are not at a correlation of one to kind of just the straight leisure market, meaning if demand falls off, the economy softens, notwithstanding what we're seeing. If the economy were to soften and demand were to soften, and we adjust fleet as the primary tool to do that, we're also looking at ways in which we can grow and expand the business in areas that don't have a one-for-one correlation as those markets do. As an example, the TNC business, where we are renting cars to Uber, or for that matter, where we have opportunity to rent cars to other fleets as a very attractive method by which they can source cars. So think about fleets owned by smaller midsized businesses, think about fleets that are owned by other companies, or for that matter, by cities, okay, where we can go in, rent cars, long-dated rental periods, very attractive from a margin point of view, and we could rent those cars in a manner that's similar to what we're doing with Uber. That is not going to exhibit the same correlation to a softening of demand. I offer that up as the way in which we're thinking about growing the business, but equally as a way in which the business will get buffered against complete exposure to a softening in the leisure market. Another area of growth for us that we have not tapped of late is what we can do with Dollar Thrifty, okay? Because we have not -- unlike our competition who I think have done a very good job, we have not availed ourselves of those brands to capture a lower price segment in the market at very attractive margins by virtue of lower cost. And that will enable us to sort of fortify what we do with the Hertz brand, yet at the same time, capture demand that may be there, okay, at lower prices, again, should demand be there. At the end of the day, though, you and I both know that decisions around whether a person goes on a business trip or a person takes a holiday is not going to be influenced $5 one way or the other in terms of the rental car cost, meaning there are larger expenses or larger circumstances that are playing on that. And then I think the last thing I would say is that our cost structure is defendable in a softening market, with roughly 70% of our costs on a variable sort of rate, again, buffered by the fact that we can be fairly quick on our feet in terms of fleet size in the way and which I described. And I think all of that sets us up, again, in a defensive posture should we need to be in one, again, notwithstanding the fact that we see the market as being really quite positive for our business at the moment.

Great. Very good. Well -- so pricing power is pretty important topic for the business right now. I mean maybe give us a few thoughts on reasons for optimism on the pricing gains you've seen and how those -- why you think those can hold up?

Well, I think -- I mean, listen, the one macro that's out there is there hasn't been a ready availability of new cars to in fleet. So if any one party had the temptation to sort of take on more and more automobiles and, therefore, be empowered to sort of lower rate without risk of being off rent because of a limited number of vehicles, that inclination couldn't be fed at the moment because the new cars are not there. I think there's little question that the automakers will be in a better position in '23 than they were in '22. But our best view is that you will not see a return to kind of a normal flow, if you will, of supply until very late in '23 into '24. And I think that the automakers, obviously, can speak for themselves, but I think they are in a tough spot to sort of calibrate how much supply they want to put in the market against risk of softening demand and higher interest rates on the financing side, but I don't see us returning to a ready availability of new cars. That's just a macro circumstance that I think will sort of keep fleets tight. I do think that the ownership structure of the 3 majors is such that I don't see any of them particularly being incented. Obviously, I can only speak for ourselves -- to sort of drive price down as a lever of demand so much as we have all talked about, us and Avis, on our earnings calls in a very common pattern, which is what I was describing before. That is everybody is mindful to sort of maintain fleet in the proper frame given where demand is to maintain high utilization and manage business on the basis of margin and return on assets. That is, we need to run a high utilization, i.e. a very high return on the asset base that we have. And therefore, I'm not inclined, and just listening to what Avis has to say, I don't think they are to sort of be of a mind to sort of run fleet up such that there's an expectation that we lose pricing power. And at the moment, as I look at now through the end of the year and then the beginning of '23, you are seeing week after week of all of us being off rent in certain markets. So the ability or the impact of any one player, if they were inclined to kind of do damage to pricing power is rather limited because you'll burn through cars in a particular occasion before it has negative consequence. But I do think the composition of the ownership of the 3 majors is not to be ignored in the context of what's there. And then I would say that when we look at, for example, where we are pacing right now on the corporate side. We are renewing nearly 100% of all corporate contracts that are up. And in excess of 90% of those, we are capturing higher price, not lower price, in terms of what that contract looks like. I think that's a very telling proposition about where the market is right now and what people are signing up for. The conversation that we have with these corporates is, by definition, less about price. So we're able to take it up. It's more about an obligation contractually for you to be delivering the cars that my employees need. That's a big deal. Last thing I'll say on pricing power, I think, runs to how much of a differentiated fleet are you running and how much choice are you giving to your customers. This is where electric vehicles come in. We continue to command premium on an RPD basis. They continue to demonstrate lower maintenance costs, and I know we'll come on to electric vehicles as a topic. I just bring it up here because I think it does give us an element of pricing power as into the extent that we have a differentiated sort of class of car that we are renting out. And that's of attraction to the consumer from a leisure point of view. The interesting thing we're seeing on the corporate space is a desire, if not an insistence, on the part of corporates to compel their employees to get into electric vehicles when they rent because they are satisfying their own carbon footprint objectives. And so that's a big deal in the context of being able to maintain a certain level of discipline and a certain level of control over the pricing power that we have.

Yes. Great. We are going to come back to EVs in a little more detail in a minute, but just take a step back, and just may relate to the EV questions later. How important is the mix of demand to Hertz? And we know that, that can impact pricing and margins. Between all the different buckets you look at, airport, off-airport, leisure, corporate, TNC, others, how important is getting the mix right? And what are you seeing in terms of broad pattern, trends?

Well, I think, listen, as many differentiated demand channels that we can have, the better off we will be in the context of anyone expressing any weakness at any given moment, or for that matter, us taking advantage of strength in any one of them. So if you just think about it, we obviously have leisure, quite significant for us. We have corporate, which I've spoken a little bit about, and equally, the TNC side. And again, they all express kind of different strengths in the context of the market in which we are. I think that the TNC element is a really rich vein for us, and we have yet to see our competition kind of enter that frame, at least in the context of the number of electric vehicles that are there. And if you look at what you hear from Uber or Lyft, you hear fairly aggressive timelines by which they want to migrate to an all-electric offering to their customers. As and to the extent those drivers are not employees, and they are not, and they will not be if their business model holds up, the ability to compel a driver to buy, okay, an electric car is a really difficult proposition. It leaves us in a very unique position to continue to serve that level of demand, meaning it is very affordable for a driver to rent a Tesla from Hertz. And these drivers know their inflection point from a P&L better than most companies. And we have come up with the right price point with Uber. We are suddenly putting them in a Tesla, offering that up to their customers, is earning them more money. It is serving what Uber has set out to be their objective of getting more electric vehicles or electric rides in the fleet. And I think we're going to continue to see that play out. That's a very strong vein of demand that I think, at least for the time being, sits uniquely with us. And I think we're going to continue to pursue that. It's not exclusive on EVs. It also includes ICE vehicles. But I think what we're doing with EVs and Tesla, in particular -- and by the way, what we will be able to do at even more affordable price points as we take on electric vehicles from General Motors, for example, where, as you know, we announced a purchase of 175,000 of them over the next 5 years. They will come at lower cap cost. They will be across a range of different models. They will prove equally, if not more attractive to drivers and at a price point that's very attractive. Add to all of that, okay, that customer segment being even more attractive to us as tax credits roll on with respect to these cars. And so the cap cost, the going in cost of making that offering is proving to be very attractive. The cost is buffering where that demand may be. But to the core of your question, having diverse levels or diverse channels of demand is critically important for all the reasons we've talked about on the last couple of questions, and that is one particular vein of demand that I think is interesting. And I would caution people, as I did on the call, RPD is not going to be the signal, okay, of success in that particular customer segment because we will offer cars at lower RPD relative to what we get in leisure, but at equal or more attractive margin by virtue of lower maintenance, okay, both because they skew heavily on electric vehicles, so maintenance is lower; and equally, they are longer-dated rentals. So an Uber driver will rent a car for 4 weeks. That's 5, 6, 7 times we don't need to touch that car. That's a very big cost savings to us. And so this is just one customer segment that I think holds considerable promise. It's not on a one-for-one correlation that you would see in leisure or corporate, much as what we're seeing in corporate is strengthened and bolstered by what I described to you in terms of contract renewal and price increase. And so I'm quite bullish on the multiple channels we have, the way in which we can grow them in the context of a diverse set of customers.

Great. Covered a lot of ground there. Going to kind of stay with the EV topic, but going to avoid any real generic question, and kind of you started talking with tax credits you mentioned. I think investors are also curious, I mean, what's your view as to how these tax credits will come on and help you, but also how is it going to fundamentally change things like the refresh cycle, operating expenses, things like that?

Well, here's a couple of interesting facts on EVs, wholly independent of the tax credit, which I'll come on to, okay? The life of these vehicles won't inherently be longer, okay, than what we see in combustion engine cars. It is therefore likely that we are going to experience a lower depreciation rate on these vehicles and perhaps what we're experiencing in kind of the short life or short history that we have right now. And they are holding residual value much higher than what we're seeing in kind of conventional ICE vehicle. That's just a couple of kind of observations to make on the car itself. I think equally, and as I said before, I'm quite excited about what we can buy from General Motors at lower cap cost. And equally, I think we're going to buy down our cost in the context of the tax credit at $7,500. What is noteworthy is that both Tesla and GM, who had been sidelined in the credit by virtue of them hitting their own supply sort of thresholds, that's been lifted in the new rules and law. And therefore, they're back in the frame in terms of where we can capture the $7,500 credit. Now there are a lot of rules to be written on this. And so it's not crystal clear as to how it plays, for example, is there recapture on short sell and the like. I'm quite confident that we won't be worrying about that set of rulemaking, in part because I think, as I said before, these will carry a long life for us in the context of the way in which these cars will play even in the hands of Uber drivers and the like, in part because there's an opportunity to re-kit the interior of a car over its lifespan, which is a very low expense cost, and the fact that these are not operating with transmissions and oil changes and so forth, I think, lead not just to lower cost, but overall, lower capital investment in the car to keep it over the length that we will see. And so I think this is really a positive set of circumstances for us, both in terms of tax credit and the buy down and cap cost with a greater variety of -- and greater choice of cars themselves. There's one other element in electric vehicles that's not to be ignored, and that is charging. And I think that we do experience and don't ignore, however unfounded it may be, some of the anxiety that's expressed mostly by leisure travelers, okay, around the charge. It's kind of the analog to how low are you willing to drive your car. Do you let your gas tank get down to an [ A ] for a half tank? Now the interesting thing is more than 50% of all Hertz rentals are kept for a duration and a distance that would require not one single charge. So the anxiety may be overstated. All of that notwithstanding, we recognize that we need to have access to and avail our customers have access to a very easy way to get at charge. So what's our strategy? Our strategy on that is to be very low in terms of the capital investment we make, meaning what we bring to the table in joint ventures and engagements that we will have, like with BP that we announced, is that we bring 0.5 million cars, knowledge of where they are and a real estate footprint that they can use to build charging stations that are in reasonable proximity to 90% of the U.S. population. But I don't want to suggest we stop at BP, meaning I am a really good buyer and contractor with any and all networks that want to come because where this will lead is we will have an app that our customers will use. They will be wholly indifferent to the network that they go use. We can guide them to charging stations that may be the product of a compilation of a dozen different charging networks. We will contract on a volume basis, unit pricing on charging, pass that along to our customers. And suddenly, they'll be able to, with ease, look at just not one network, but across 10 and have access to as many charging networks as are out there. And we're starting with BP, as I said, and they have plans to build what they're calling Gigahubs. These will be not just 10 charging stations, but perhaps as many as 50, either on Hertz premise or in proximity to Hertz premise, open to the general public, but obviously, with preferred access and pricing to Hertz customers. And that's just the beginning of where we can go. And again, I think there's a first-mover edge in this because it is an important element of a broader strategy around a growing EV fleet.

Yes. Great answer. So we covered a lot. Probably the last kind of topic I was hoping to cover on fleet is -- it's fair to say the way you've bought and sold cars changed a lot over time. And again, this goes back to an earlier question about if broader market conditions change, how much flexibility do you have in how you buy and sell fleet today versus...

I mean we enjoy considerable flexibility. And if anybody was looking for evidence of that, it was over the course of the second and third quarter where we saw multiple standard deviation movements in residual prices and in anticipation of that because my view is that used cars were not going to be a unique asset class that would not experience some decline in value like every other asset class in the world. And it demonstrated that coming off of extraordinarily elevated prices. And so we engaged in a very aggressive set of sell and buy because we look to move the geography of where the embedded equity value was to lever purchases of cars that were declining in price. What I mean by that is we looked at the equity cushion that sat within our ABS facility, and it need not be and shouldn't have been as high as it was, but it was by virtue of a considerable delta at very elevated prices between fair market value and book value. It stood to reason that we could do one of 2 things. We could either watch the market, take that value, okay, as used car prices came down or we ourselves could look to rotate the fleet, and we did that. We rotated the fleet. We captured considerable equity cushion in gain on sale, and we used that to subsidize the purchase of additional fleet that we were buying at lower prices than where things were. And so we anticipated that movement and acted on that movement. By the way, you heard on the third quarter call, Avis followed suit in the context of what they saw. More to your question of, is there some discipline in this industry that wasn't there before, I think that's a good example of the industry showing some discipline. But I think equally, our activity over the course of the second and third quarter should be very clear evidence of our inclination, willingness and, most importantly, our ability to engage in fleet rotation. The used car market -- and obviously, I spent nearly 30 years on Wall Street, and I'm new to it, but the depth and liquidity of the used car market is phenomenal. I mean it rivals a lot of markets that Deutsche Bank or Goldman Sachs traded in. And we should use that, and we will use that, and we are using that as a means of calibrating where fleet is, again, relative to demand, but equally reflecting on our ability to react to precipitous price movement. Now I don't think that we will see the kind of movement that we saw over the second and into the third quarter on residual prices of used cars. I think we're at a much more -- we're at an elevated but a more normalized view of where that is. And I think it's likely to experience a downward slope if you were to graph forward pricing, but I don't think it's with the speed and the volatility that we saw. But if it is, we'll react to it, and I think the depth and liquidity of the used car market provides us with an ability to do that.

Good. So this is kind of an extension of the fleet question, but maintaining financial flexibility has always been a thing you've talked about doing and...

This is the distinction I was drawing when you asked the question, which I think is a good one. So how did the industry behave years ago? And how is it behaving now? This is one big differentiating factor, which is you bought fleet. You kind of set it and forget it. And no matter what happened in the market, you were a prisoner of a number that you had otherwise said for yourself, not just on January 1, but in advance of that because you were buying the model year, okay? And I think that change is a significant one, both in terms of our ability to capture demand where we see it at attractive points and running a high ROA, high utilization, highly profitable fleet. But equally, it runs to the question of how can you act if, in fact, demand was to soften, again, notwithstanding what we're seeing over the next 6 at 12 months based on a variety of different indicators. But assume that all the way, you're in a position in that market to do it.

Right. Yes, Yes. Glad you stretched that, Steve. So the question was kind of on the financial flexibility goes to capital allocation and stock buybacks have been a big part of the story so far. How do you prioritize capital allocation, again, in a maybe less certain macro environment?

Look, I think the strength of our balance sheet, the strength of our liquidity, the low leverage that we maintain, I think, all provides us with considerable flexibility to do what we need to do to run the company. What I mean by that is we are feeding, obviously, fleet CapEx, and we talked a lot about it, okay? We're equally feeding nonfleet CapEx in the context of investment in the company to sort of put ourselves in a much better position both to operate our book of business and to build -- to give our customers a much better sort of user experience than what they've had in the past. So those investments are happening. And along the way, they will offset considerable operating costs, again, as you move to more app-driven engagement than the human intensity of the way in which the business has otherwise been run. I think on share repurchase, look, it's not for me to render judgment as to sort of where value sits in our stock. I obviously think that the forward value and the forward proposition for Hertz is a considerable one. The market will render a judgment on that. But I think equally, I sit there at a very low leverage point. I don't particularly find the credit markets now to be well suited to go out and raise money, but I do have capacity to do that, market permitting. And honestly, if the stock proves to be of exceptional value with a high ROI and without necessarily offsetting investments I'm making in fleet and nonfleet, I could see a world in which we continue to buyback stock. And if leverage is available, we will put leverage on because we sit in a very underlevered position. I'm not going to do that in the context of a market that's not particularly receptive to issue on the credit side. And again, I'm not rendering judgment on any particular stock price, but to say this is a set of flexible tools that this company has to drive shareholder value, both in the near term and in the long term. And I think we're really set up to do that. And I'm quite clear minded about the investments that we need to make to drive long-term value for our shareholders, but I'm not at all blind to sort of where the stock is and where buyback proves to be a continued attractive sort of position from an ROI point of view to invest. And that's how I see the financial landscape.

Fair enough. Well, we're -- we really have a little bit of time left. So why don't we wrap up with kind of an open-ended question? You've been in the seat here at Hertz about 9 months -- almost 9 months. What's worked well? Where do you want to be better? And what's the big strategic thing for next year?

Well, listen, I've enjoyed the first 9 months of a market that has been quite receptive to travel and to the way in which our business performs. It has benefited from considerable EBITDA contribution from gain on sale in cars. I equally think that the last 9 months has reflected both a clear-mindedness by which we need to manage our fleet with great agility and the fact that the company did that and rotated both by virtue of where demand sits, but equally by virtue of where residual car prices were. Meaning if you wanted to put this company through the test of how it would react and whether or not it was true, statements I've made about running this business in an asset management sort of mindset like I did in my prior life. The last 9 months bear that out because we saw a very volatile market, captured what we needed to, held ourselves out to sort of run the fleet tight, very high utilization, and I'm really quite pleased with the way our team reacted to it. Meaning, it's not just a financial decision you make much as that's the ignition point, but it's a question of whether your team in the field is capable of executing on that, and I think the Hertz team was. And I think that's a very, very positive view. And equally positive finding is the quality of the talent in the field. I have been sort of very, very pleased with the long tenure of people in the field. Now you'd say, okay, what does that really mean? Honestly, it means a lot. It means that these are people who have an intuitive sense of experience about how to react to issues. It's a team that is really dying to get their hands on tools that can further accentuate kind of their contribution to the overall business. We put profit-sharing in place, which is driving a highly motivated, very well-seasoned force just sort of recognize there's inherent value to their execution in the field. All of that is a real positive. I think on the challenges that sit in front of us, they weren't new nor a surprise, but we've got a technology build that we're now well on the way to executing. It's to sort of pull this business into the cloud. It's to put us in a position where we've got better tools to manage pricing. It means that we need better tools to manage where the fleet is and when it is. All of those are doable. We've got really good new talent in both as a CIO and a chief product officer to do that. And I'm really quite excited about the development of technology to help us run more efficiently at lower cost, yielding better return on assets and all the while providing our customers with a much better experience to sort of where we are. And last, I would say, I'm ever more positive on what we can do in TNC in terms of one big strategic move, and the other, what we can do with Dollar Thrifty, which we hadn't. And I think those are 2 very big things for us to do. And last, I would say, part of the reason why we have been successful at aggressively managing our fleet is that we continue to make use of our own retail used car network, and we've made very good use of Carvana, which we laid out as one of several strategic initiatives. And last month was the best month we had in terms of flow, notwithstanding a lot that has been said or commented on in the context of that company in the narrow or through the narrow prism of Hertz, it is an excellent, excellent partner for us to sell cars and harvest 5% to 6% better than what we get in the wholesale market. And I think there's more to do with that on the forward.

Great. Well, we covered a lot of ground. We're bit out of time, but Stephen, thanks so much for coming to the conference and sharing some views with us. And thanks, everyone, here in the room and also online. And enjoy the rest of your day.

Thank you, Chris. Appreciate it.

Thanks.