HERTZ GLOBAL HOLDINGS INC

Previous wording

Three Months Ended March 31, 2024 Operating Overview

Current wording

Three and Six Months Ended June 30, 2024 Operating Overview

Previous wording

As of March 31, 2024, approximately 50% of the First EV Disposal Group, which was classified as held for sale in December 2023, has been sold and the carrying values of the remaining vehicles written down to fair value less costs to sell. This resulted in a charge of $81 million, inclusive of the vehicles sold and the write-down on the remaining vehicles, for the three months ended March 31, 2024 in our Americas RAC segment. Additionally, the Company identified the Second EV Disposal Group that it desired to sell in response to management's determination that the supply of EVs exceeded customer demand, elevated EV damage and collision costs and a decline in EV residual values. As a result, the Second EV Disposal Group was classified as held for sale as of March 31, 2024. The carrying values of the vehicles within the Second EV Disposal Group were written down to fair value less costs to sell and resulted in write-downs of $107 million and $7 million in the Company's Americas RAC and International RAC segments, respectively, for the three months ended March 31, 2024. See Note 4, "Revenue Earning Vehicles," in Part I, Item 1 of this Quarterly Report for additional information.

Current wording

As of June 30, 2024, approximately 90% of the First EV Disposal Group, which was classified as held for sale in December 2023, has been sold and the carrying values of the remaining vehicles written down to fair value less costs to sell. This resulted in charges of $5 million and $85 million, inclusive of the vehicles sold and the write-down on the remaining vehicles, for the three and six months ended June 30, 2024, respectively, in our Americas RAC segment. As of June 30, 2024, approximately 60% of the Second EV Disposal Group, which was classified as held for sale in March 2024, has been sold and the carrying values of the remaining vehicles written down to fair value less costs to sell. This resulted in charges of $20 million and $127 million and $5 million and $12 million, inclusive of the vehicles sold and the write-down on the remaining vehicles, in our Americas RAC and International RAC segments for the three and six months ended June 30, 2024, respectively. See Note 4, "Revenue Earning Vehicles," in Part I, Item 1 of this Quarterly Report for additional information.

Previous wording

The following charts provide the period-over-period change for several key factors influencing our results for the three months ended March 31, 2024 and 2023.

Current wording

The following charts provide the period-over-period change for several key factors influencing our results for the three and six months ended June 30, 2024 and 2023.

Previous wording

Depreciation of revenue earning vehicles and lease charges, net increased $588 million in the first quarter of 2024 compared to the same period in 2023, of which $527 million and $61 million were attributed to our Americas RAC and International RAC segments, respectively. Depreciation of revenue earning vehicles and lease charges, net increased due primarily to (i) deterioration in the residual values at the expected time of disposal, (ii) per unit losses recognized on vehicle dispositions during the first quarter of 2024 compared to per unit gains recognized in the same period in 2023, (iii) write-downs on the carrying values of the EVs classified as held for sale and (iv) an increase in Average Vehicles. We expect that depreciation of revenue earning vehicles and lease charges, net in our Americas RAC segment will continue to be impacted during 2024 by several factors: (i) an uncertain residual environment, (ii) the intended sale of older vehicles and (iii) a larger average fleet compared to that held in 2023.

Current wording

Depreciation of revenue earning vehicles and lease charges, net increased $706 million in the second quarter of 2024 compared to the same period in 2023, of which $633 million and $73 million were attributed to our Americas RAC and International RAC segments, respectively. Depreciation of revenue earning vehicles and lease charges, net increased due primarily to (i) deterioration in the residual values at the expected time of disposal, (ii) per unit losses recognized on vehicle dispositions during the second quarter of 2024 compared to per unit gains recognized in the same period in 2023 and (iii) an increase in Average Vehicles. We expect that depreciation of revenue earning vehicles and lease charges, net in our Americas RAC segment will continue to be impacted during the second half of 2024 by an uncertain residual environment and heightened disposals as part of our fleet refresh initiatives versus the second half of 2023.

Previous wording

DOE increased $146 million in the first quarter of 2024 compared to the same period in 2023, with increases of $114 million and $34 million in our Americas RAC and International RAC segments, respectively. DOE in our Americas RAC increased due primarily to higher volume.

Current wording

DOE increased $93 million in the second quarter of 2024 compared to the same period in 2023, with increases of $59 million and $33 million in our Americas RAC and International RAC segments, respectively. DOE increased due primarily to a loss recovery settlement in 2023 in our Americas RAC segment, increased self-insurance liabilities as a result of adverse experience and case development, higher personnel costs and increased collision and damage costs.

Previous wording

Non-vehicle interest expense, net increased $24 million in the first quarter of 2024 compared to the same period in 2023 due primarily to higher debt levels and higher benchmark rates, partially offset by interest income due to higher market rates.

Current wording

Non-vehicle interest expense, net increased $32 million in the second quarter of 2024 compared to the same period in 2023 due primarily to higher debt levels and higher benchmark rates, partially offset by interest income due to higher market rates.

Previous wording

For the three months ended March 31, 2024, we recorded a tax benefit of $395 million, which resulted in an effective tax rate of 59%. For the three months ended March 31, 2023, we recorded a tax benefit of $134 million, which resulted in an effective tax rate of (74)%. The change in taxes in the three months ended March 31, 2024 compared to the same period in 2023 was primarily driven by lower pretax income, lower estimated EV credits in 2024 and the recognition of uncertain tax benefits related to our tax restructuring of European operations in 2023.

Current wording

For the three months ended June 30, 2024, we recorded a tax provision of $391 million, which resulted in an effective tax rate of (61%). For the three months ended June 30, 2023, we recorded a tax provision of $18 million, which resulted in an effective tax rate of 7%. The change in taxes in the three months ended June 30, 2024 compared to the same period in 2023 was primarily driven by lower pretax income in 2024, valuation allowances on U.S. and foreign deferred tax assets recorded in 2024 and lower estimated EV credits in 2024.

Previous wording

SG&A decreased $60 million in the first quarter of 2024 compared to the same period in 2023 driven primarily by a decrease of $98 million associated with our corporate operations, partially offset by increases of $20 million and $19 million in our International RAC and Americas RAC segments, respectively. The decrease in cost associated with our corporate operations was due primarily to a non-cash stock-based compensation gain related to forfeitures of former CEO awards in March 2024 and intercompany royalty assessment fees received from our International RAC segment, partially offset by increased restructuring related costs. SG&A in our International RAC segment increased due primarily to higher intercompany royalty assessment fees paid to our corporate operations and increased restructuring related costs. SG&A in our Americas RAC segment increased due primarily to higher IT and personnel costs, partially offset by lower litigation reserves.

Current wording

SG&A decreased $101 million in the first half of 2024 compared to the first half of 2023 driven primarily by a decrease of $130 million associated with our corporate operations, partially offset by increases of $20 million and $8 million in our International RAC and Americas RAC segments, respectively. The decrease in cost associated with our corporate operations was due primarily to a non-cash stock-based compensation gain related to forfeitures of former CEO awards in March 2024 and intercompany royalty assessment fees received from our International RAC segment, partially offset by increased restructuring related costs. SG&A in our International RAC segment increased due primarily to intercompany royalty assessment fees paid to our corporate operations and increased restructuring related costs, partially offset by decreased advertising spend. SG&A in our Americas RAC segment increased due primarily to increased restructuring related costs, partially offset by reduced advertising spend.

Previous wording

Hertz Global had income of $86 million and a loss of $118 million from the change in fair value of Public Warrants that was incremental to Hertz for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Hertz Global had income of $165 million and $251 million from the change in fair value of Public Warrants that were incremental to Hertz for the second quarter and first half of 2024, respectively, included in Hertz Global's unaudited condensed consolidated statements of operations in Part I, Item 1 of this Quarterly Report.

Previous wording

Total Americas RAC revenues increased $10 million in the first quarter of 2024 compared to the same period in 2023 due to higher volume, partially offset by decreased pricing. The increase in Transaction Days was driven by volume increases across most leisure categories and ride sharing. Total RPD declined due primarily to lower rates in most categories. Airport revenues comprised 66% of total revenues for the segment in the first quarter of 2024 compared to 68% in the same period in 2023.

Current wording

Total Americas RAC revenues decreased $78 million in the first half of 2024 compared to the first half of 2023 due to lower pricing, partially offset by higher volume. Total RPD declined due primarily to lower rates in most customer channels. The increase in Transaction Days was driven primarily by volume increases across most leisure categories and ride sharing. Airport revenues comprised 68% of total revenues for the segment in the first half of 2024 and the first half of 2023.

Previous wording

Depreciation of revenue earning vehicles and lease charges, net for Americas RAC increased $527 million in the first quarter of 2024 compared to the same period in 2023 due primarily to (i) deterioration in the residual values at the expected time of disposal, (ii) per unit losses recognized on vehicle dispositions during the first quarter of 2024 compared to per unit gains recognized in the same period in 2023, (iii) write-downs on the carrying values of the EVs classified as held for sale and (iv) an increase in Average Vehicles. We expect that depreciation of revenue earning vehicles and lease charges, net in our Americas RAC segment will continue to be impacted during 2024 by several factors: (i) an uncertain residual environment, (ii) the intended sale of older vehicles and (iii) a larger average fleet compared to that held in 2023.

Current wording

Depreciation of revenue earning vehicles and lease charges, net for Americas RAC increased $1.2 billion in the first half of 2024 compared to the first half of 2023 due primarily to (i) deterioration in the residual values at the expected time of disposal, (ii) per unit losses recognized on vehicle dispositions during the first half of 2024 compared to per unit gains recognized in the same period in 2023, (iii) write-downs on the carrying values of the EVs classified as held for sale, primarily in the first quarter of 2024 and (iv) an increase in Average Vehicles. We expect that depreciation of revenue earning vehicles and lease charges, net in our Americas RAC segment will continue to be impacted during the second half of 2024 by an uncertain residual environment and heightened disposals as part of our fleet refresh initiatives versus the second half of 2023.

Previous wording

Vehicle interest expense for Americas RAC increased $23 million in the first quarter of 2024 compared to the same period in 2023 due primarily to higher average interest rates resulting primarily from the issuances of new HVF III Series Notes in 2023, higher benchmark rates on the HVF III 2021-A Notes and increased debt levels. Vehicle interest expense in our Americas RAC segment was also impacted by the unwind of certain of its interest rate caps in the first quarter of 2023 resulting in the realization of $88 million of previously unrealized gains, partially offset by a $98 million realized gain for which there was no comparable transaction in 2024.

Current wording

Vehicle interest expense for Americas RAC increased $34 million in the first half of 2024 compared to the first half of 2023 due primarily to higher average interest rates resulting primarily from the issuances of new HVF III Series Notes in 2023 and higher benchmark rates on the HVF III 2021-A Notes. Vehicle interest expense in our Americas RAC segment was also impacted by the unwind of certain of its interest rate caps in the first quarter of 2023 resulting in the realization of $88 million of previously unrealized gains, partially offset by a $98 million realized gain for which there was no comparable transaction in 2024.

Previous wording

Total revenues for International RAC increased $25 million in the first quarter of 2024 compared to the same period in 2023 due primarily to higher volume. Transaction Days increased 7% driven by higher volume in certain leisure categories, primarily in Europe. Total RPD in the first quarter of 2024 was largely consistent with the same period in 2023.

Current wording

Total revenues for International RAC increased $3 million in the second quarter of 2024 compared to the same period in 2023 due primarily to higher volume, partially offset by lower pricing. Transaction Days increased 4% driven by higher volume in certain leisure categories, primarily in Europe. Total RPD declined in the second quarter of 2024 compared to the same period in 2023 due primarily to lower rates in most customer channels.

Previous wording

Depreciation of revenue earning vehicles and lease charges, net for International RAC in the first quarter of 2024 increased $61 million compared to the same period in 2023 due primarily to (i) per unit losses recognized on vehicle dispositions in 2024 compared to per unit gains recognized in 2023, (ii) deterioration in the residual values at the expected time of disposal, (iii) an increase in Average Vehicles and (iv) write-downs on the carrying values of the EVs classified as held for sale.

Current wording

Depreciation of revenue earning vehicles and lease charges, net for International RAC in the second quarter of 2024 increased $73 million compared to the same period in 2023 due primarily to (i) per unit losses recognized on vehicle dispositions in the second quarter of 2024 compared to per unit gains recognized in the same period in 2023, (ii) deterioration in the residual values at the expected time of disposal and (iii) an increase in Average Vehicles.

Previous wording

Vehicle interest expense for International RAC increased $7 million in the first quarter of 2024 compared to the same period in 2023 due primarily to higher market interest rates and higher debt levels.

Current wording

Vehicle interest expense for International RAC increased $7 million in the second quarter of 2024 compared to the same period in 2023 due primarily to higher debt levels and higher market interest rates.

Previous wording

DOE for International RAC increased $34 million in the first quarter of 2024 compared to the same period in 2023 due primarily to increased volume resulting in higher personnel and fleet-related charges, higher self-insurance liabilities as a result of adverse experience and case development and increased collision and damage costs.

Current wording

DOE for International RAC increased $67 million in the first half of 2024 compared to the first half of 2023 due primarily to higher personnel costs, increased self-insurance liabilities as a result of adverse experience and case development and increased collision and damage costs.

Previous wording

SG&A for International RAC in the first quarter of 2024 increased $20 million compared to the same period in 2023 due primarily to higher intercompany royalty assessment fees paid to our corporate operations and increased restructuring related costs.

Current wording

SG&A for International RAC increased $20 million in the first half of 2024 compared to the first half of 2023 due primarily to higher intercompany royalty assessment fees paid to our corporate operations and increased restructuring related costs, partially offset by decreased advertising spend.

Previous wording

(2)Represents charges incurred under restructuring actions as defined in U.S. GAAP. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.

Current wording

(2)Represents charges incurred under restructuring actions as defined in U.S. GAAP. Also includes restructuring related charges such as incremental costs incurred related to personnel reductions and closure of underperforming locations.

Previous wording

(6)Represents miscellaneous items. For the three months ended March 31, 2024, primarily includes certain IT-related charges, partially offset by certain litigation settlements. For the three months ended March 31, 2023, primarily includes certain IT-related charges.

Current wording

(6)Represents miscellaneous items. For the three and six months ended June 30, 2024, primarily includes certain IT-related charges, cloud computing costs and certain storm-related damages, partially offset by certain litigation settlements. For the three and six months ended June 30, 2023, primarily includes a loss recovery settlement, partially offset by certain IT-related charges.

Previous wording

As of March 31, 2024, we had $465 million of cash and cash equivalents and $480 million of restricted cash and cash equivalents. As of March 31, 2024, $178 million of cash and cash equivalents and $74 million of restricted cash and cash equivalents were held by our subsidiaries outside of the U.S. We continue to assert non-permanent reinvestment of foreign earnings that give rise to excess cash, provided such cash can be remitted in a tax efficient manner.

Current wording

As of June 30, 2024, we had $568 million of cash and cash equivalents and $426 million of restricted cash and cash equivalents. As of June 30, 2024, $277 million of cash and cash equivalents and $70 million of restricted cash and cash equivalents were held by our subsidiaries outside of the U.S. We continue to assert non-permanent reinvestment of foreign earnings that give rise to excess cash, provided such cash can be remitted in a tax efficient manner.

Previous wording

As of March 31, 2024 and December 31, 2023, Hertz had cash and cash equivalents of $465 million and $764 million, respectively, and restricted cash and cash equivalents of $480 million and $442 million, respectively. The following table summarizes the net change in cash and cash equivalents and restricted cash and cash equivalents for the periods shown:

Current wording

As of June 30, 2024 and December 31, 2023, Hertz had cash and cash equivalents of $568 million and $764 million, respectively, and restricted cash and cash equivalents of $426 million and $442 million, respectively. The following table summarizes the net change in cash and cash equivalents and restricted cash and cash equivalents for the periods shown:

Previous wording

During the three months ended March 31, 2024, cash flows from operating activities decreased $191 million period over period due primarily to a $270 million change in net income, as adjusted for non-cash and non-operating items, partially offset by a $79 million change in working capital accounts. Cash flows from working capital accounts increased due primarily to non-vehicle payables due to timing, an increase in self-insurance liabilities as a result of adverse experience and case development and improved collections for certain non-vehicle receivables.

Current wording

During the first half of 2024, cash flows from operating activities decreased $138 million period over period due primarily to a $432 million change in net income, as adjusted for non-cash and non-operating items, partially offset by a $294 million change in working capital accounts. Cash flows from working capital accounts increased due primarily to lower value added tax receivables, an increase in self-insurance liabilities as a result of adverse experience and case development, non-vehicle payables due to timing, non-recurring capital outlays for certain prepaids in 2023 and a loss recovery settlement received in the second half of 2023.

Previous wording

Our primary investing activities relate to the acquisition and disposal of revenue earning vehicles. During the three months ended March 31, 2024, there was a $785 million decrease in the cash used in investing activities period over period due primarily to a $947 million decrease in revenue earning vehicle expenditures, net, partially offset by $168 million of net proceeds received in March 2023 from the sale of certain non-vehicle capital assets as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report. The decrease in revenue earning vehicle expenditures, net primarily resulted from per unit losses recognized on vehicle dispositions in the first quarter of 2024 compared to per unit gains recognized in the same period in 2023 and higher fleet levels at the end of 2023 that continued into the first quarter of 2024.

Current wording

Our primary investing activities relate to the acquisition and disposal of revenue earning vehicles. During the first half of 2024, there was a $945 million decrease in the cash used in investing activities period over period due primarily to a $1.1 billion decrease in revenue earning vehicle expenditures, net, partially offset by $168 million of net proceeds received in March 2023 from the sale of certain non-vehicle capital assets as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report. The decrease in revenue earning vehicle expenditures, net primarily resulted from per unit losses recognized on vehicle dispositions in the first half of 2024 compared to per unit gains recognized in the same period in 2023 and higher fleet levels at the end of 2023 that continued into 2024.

Previous wording

Net financing cash inflows were $85 million in the three months ended March 31, 2024 compared to $740 million in the 2023 period. The $655 million decrease in cash inflows is due primarily to a decrease of $1.2 billion in net proceeds from vehicle debt as a result of less issuances in the first quarter of 2024 versus the comparable period in 2023. Cash flows from financing activities were also impacted by a $450 million increase in net proceeds from non-vehicle debt resulting primarily from outstanding draws on the First Lien RCF in the first quarter of 2024 and a $116 million reduction in dividends paid to Hertz Holdings in the first quarter of 2024, which were primarily used for share repurchases in the comparable period in 2023.

Current wording

Net financing cash inflows were $1.7 billion in the first half of 2024 compared to $2.4 billion in the 2023 period. The $738 million decrease in cash inflows is due primarily to a decrease of $1.6 billion in net proceeds from vehicle debt as a result of less issuances in the first half of 2024 versus the comparable period in 2023. Cash flows from financing activities were also impacted by a $659 million increase in net proceeds from non-vehicle debt resulting from issuances of the First Lien Senior Notes and the Exchangeable Notes in June 2024, along with outstanding draws on the First Lien RCF in the first half of 2024. A reduction in dividends paid to Hertz Holdings of $214 million in the first half of 2024, which were primarily used for share repurchases in the comparable period in 2023, further increased cash inflows during 2024.

Previous wording

As of March 31, 2024 and December 31, 2023, Hertz Global had cash and cash equivalents of $465 million and $764 million, respectively, and restricted cash and cash equivalents of $480 million and $442 million, respectively. The following table summarizes the net change in cash and cash equivalents and restricted cash and cash equivalents for Hertz Global for the periods shown:

Current wording

As of June 30, 2024 and December 31, 2023, Hertz Global had cash and cash equivalents of $568 million and $764 million, respectively, and restricted cash and cash equivalents of $426 million and $442 million, respectively. The following table summarizes the net change in cash and cash equivalents and restricted cash and cash equivalents for Hertz Global for the periods shown:

Previous wording

In June 2022, Hertz Global's independent Audit Committee recommended, and its Board of Directors approved, the 2022 Share Repurchase Program that authorized additional repurchases of up to an incremental $2.0 billion worth of shares of Hertz Global's outstanding common stock. The 2022 Share Repurchase Program, announced on June 15, 2022, has no initial time limit, does not obligate Hertz Global to acquire any particular amount of common stock and can be discontinued at any time. However, during the effective period of Amendment No. 8, as disclosed in Note 5, "Debt," in Part I, Item 1 of this Quarterly Report, the repurchase of shares is not permitted commencing April 16, 2024 through April 1, 2025. Since the inception of the 2022 Share Repurchase Program, a total of 66,684,169 shares of Hertz Global's common stock have been repurchased in open-market transactions for an aggregate purchase price of $1.1 billion, excluding applicable excise tax. There were no share repurchases during the three months ended March 31, 2024.

Current wording

In June 2022, Hertz Global's independent Audit Committee recommended, and its Board of Directors approved, the 2022 Share Repurchase Program that authorized additional repurchases of up to an incremental $2.0 billion worth of shares of Hertz Global's outstanding common stock. The 2022 Share Repurchase Program, announced on June 15, 2022, has no initial time limit, does not obligate Hertz Global to acquire any particular amount of common stock and can be discontinued at any time. However, during the effective period of Amendment No. 8, as disclosed in Note 6, "Debt," in Part I, Item 1 of this Quarterly Report, the repurchase of shares is not permitted commencing April 16, 2024 through April 1, 2025. Since the inception of the 2022 Share Repurchase Program, a total of 66,684,169 shares of Hertz Global's common stock have been repurchased in open-market transactions for an aggregate purchase price of $1.1 billion, excluding applicable excise tax. There were no share repurchases during the six months ended June 30, 2024.

Previous wording

Cash paid for interest on vehicle debt during the three months ended March 31, 2024 and 2023 was $121 million and $96 million, respectively. The $25 million increase in cash paid for vehicle debt interest is due primarily to higher interest rates and higher debt levels. Cash paid for interest on non-vehicle debt during the three months ended March 31, 2024 and 2023 was $58 million and $36 million, respectively. The $22 million increase in cash paid for non-vehicle debt interest is due primarily to higher debt levels and higher outstanding borrowings on the First Lien RCF.

Current wording

Cash paid for interest on vehicle debt during the first half of 2024 and 2023 was $247 million and $207 million, respectively. The $40 million increase in cash paid for vehicle debt interest is due primarily to higher interest rates and higher debt levels. Cash paid for interest on non-vehicle debt during the first half of 2024 and 2023 was $155 million and $117 million, respectively. The $38 million increase in cash paid for non-vehicle debt interest is due primarily to higher debt levels and higher outstanding borrowings on the First Lien RCF.

Previous wording

In April 2024, Amendment No. 8 became effective and requires a First Lien Ratio of less than or equal to 5.0x in the second and third quarters of 2024 and 4.75x in the fourth quarter of 2024 and the first quarter of 2025. Amendment No. 8 also contains a minimum liquidity covenant of $400 million for each month ending in the second and third quarters of 2024 and $500 million for each month ending in the fourth quarter of 2024 and the first quarter of 2025. Amendment No. 8 also adds certain limitations on Restricted Payments and Permitted Investments (each as defined in the First Lien Credit Agreement). Under the terms of Amendment No. 8, the increased First Lien Ratio, minimum liquidity covenant, and limitations on Restricted Payments and Permitted Investments will sunset on the first day of the second quarter of 2025.

Current wording

In April 2024, Amendment No. 8 became effective and requires a First Lien Ratio of less than or equal to 5.0x in the second and third quarters of 2024 and 4.75x in the fourth quarter of 2024 and the first quarter of 2025. Amendment No. 8 also contains a minimum liquidity covenant of $400 million for each month ending in the second and third quarters of 2024 and $500 million for each month ending in the fourth quarter of 2024 and the first quarter of 2025. Liquidity as defined in the First Lien Credit Agreement may be materially different than corporate liquidity presented above. Amendment No. 8 also adds certain limitations on Restricted Payments and Permitted Investments (each as defined in the First Lien Credit Agreement). Under the terms of Amendment No. 8, the increased First Lien Ratio, minimum liquidity covenant, and limitations on Restricted Payments and Permitted Investments will sunset on the first day of the second quarter of 2025.

Previous wording

As of March 31, 2024, there were outstanding standby letters of credit totaling $944 million comprised primarily of $684 million issued under the First Lien RCF and $245 million issued under the Term C Loan. As of March 31, 2024, no capacity remained to issue additional letters of credit under the Term C Loan. Such letters of credit have been issued primarily to provide credit enhancement for our asset-backed securitization facilities and to support our insurance programs, as well as to support our vehicle rental concessions and leaseholds. As of March 31, 2024, none of the issued letters of credit have been drawn upon.

Current wording

As of June 30, 2024, there were outstanding standby letters of credit totaling $843 million comprised primarily of $583 million issued under the First Lien RCF and $245 million issued under the Term C Loan. As of June 30, 2024, no capacity remained to issue additional letters of credit under the Term C Loan. Such letters of credit have been issued primarily to provide credit enhancement for our asset-backed securitization facilities and to support our insurance programs, as well as to support our vehicle rental concessions and leaseholds. As of June 30, 2024, none of the issued letters of credit have been drawn upon.

Previous wording

The First Lien Credit Agreement requires us to comply with the following financial covenant: the First Lien Ratio, which requires a ratio of less than or equal to 3.0x in the first and last quarters of the calendar year and 3.5x in the second and third quarters of the calendar year. As of March 31, 2024, we were in compliance with the First Lien Ratio. Amendment No. 8 temporarily increases the First Lien Ratio and requires a minimum liquidity covenant for each fiscal quarter ending June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025, as discussed above.

Current wording

The First Lien Credit Agreement requires us to comply with the following financial covenant: the First Lien Ratio, which requires a ratio of less than or equal to 3.0x in the first and last quarters of the calendar year and 3.5x in the second and third quarters of the calendar year. Amendment No. 8 temporarily increases the First Lien Ratio and contains a minimum liquidity covenant for each fiscal quarter beginning in the second quarter of 2024 and will sunset on the first day of the second quarter of 2025, as discussed above. As of June 30, 2024, we were in compliance with the First Lien Ratio, as temporarily amended.

Previous wording

In addition to the financial covenant, the First Lien Credit Agreement contains customary affirmative covenants including, among other things, the delivery of quarterly and annual financial statements and compliance certificates, and covenants related to conduct of business, maintenance of property and insurance, compliance with environmental laws and the granting of security interests for the benefit of the secured parties under that agreement on after-acquired real property, fixtures and future subsidiaries. The First Lien Credit Agreement also contains customary negative covenants, including, among other things, the incurrence of liens, indebtedness, asset dispositions and restricted payments.

Current wording

Additionally, our Corporate Indebtedness contain customary affirmative covenants including, among other things, the delivery of quarterly and annual financial statements and/or compliance certificates, and covenants related to conduct of business, maintenance of property and insurance, compliance with environmental laws and, where applicable, the granting of security interests for the benefit of the secured parties under the applicable agreements on after-acquired real property, fixtures and future subsidiaries.

Previous wording

As of March 31, 2024, we were in compliance with all covenants in the First Lien Credit Agreement.

Current wording

As of June 30, 2024, we were in compliance with all covenants under the terms of agreements governing the respective Corporate Indebtedness.

Previous wording

Revenue earning vehicle expenditures decreased $920 million, or 33%, in the three months ended March 31, 2024 compared to the 2023 period, primarily in our Americas RAC segment, resulting from higher fleet levels at the end of 2023 that continued into the first quarter of 2024.

Current wording

Revenue earning vehicle expenditures decreased $916 million, or 14%, in the first half of 2024 compared to the first half of 2023, primarily in our Americas RAC segment, resulting from higher fleet levels at the end of 2023 that continued into 2024.

Previous wording

In the three months ended March 31, 2024, proceeds for non-vehicle capital assets decreased by $172 million compared to the 2023 period, primarily in our Americas RAC segment, resulting from the sale of certain non-vehicle capital assets in March 2023 as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report. In the three months ended March 31, 2024, expenditures for non-vehicle capital assets decreased by $12 million, or 27%, compared to the 2023 period, primarily in our corporate operations, driven in part by decreased IT-related spend.

Current wording

In the first half of 2024, proceeds for non-vehicle capital assets decreased by $169 million compared to the first half of 2023, primarily in our Americas RAC segment, resulting from the sale of certain non-vehicle capital assets in March 2023 as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report. In the first half of 2024, expenditures for non-vehicle capital assets decreased by $64 million compared to the 2023 period, primarily in our corporate operations, driven in part by a non-recurring capital outlay for certain non-vehicle prepaids in the 2023 period.

Previous wording

•the age of our fleet, and its impact on vehicle carrying costs, customer service scores, as well as on our ability to sell vehicles at acceptable prices and times;

Current wording

•the age of our fleet and its impact on vehicle carrying costs and customer service scores, as well as on our ability to sell vehicles at acceptable prices and times;

Previous wording

•our ability to implement our business strategy or strategic transactions, including our ability to implement plans to support a large-scale EV fleet and to play a central role in the modern mobility ecosystem;

Current wording

•our ability to implement our business strategy or strategic transactions, including our ability to implement plans to support an electric vehicle fleet and to play a central role in the modern mobility ecosystem;

Previous wording

•our ability to comply, and the cost and burden of complying, with ESG regulations or expectations of stakeholders, and otherwise achieve our corporate responsibility goals;

Current wording

•our ability to comply, and the cost and burden of complying, with environmental, social and governance, or ESG, regulations or expectations of stakeholders, and otherwise achieve our corporate responsibility goals;

Previous wording

•volatility in our share price, our ownership structure and certain provisions of our charter documents could negatively affect the market price of our common stock;

Current wording

•volatility in our share price, our ownership structure and certain provisions of our charter documents, which could negatively affect the market price of our common stock;