Hertz Global Holdings (HTZ) risk factors, FY2024 10-K

RISKS RELATED TO OUR FLEET

1. 01The mix of program and non-program vehicles in our fleet, as well as declining values of our non-program vehicles, can subject us to an increased residual value risk
2. 02We may be unable to purchase adequate supplies of competitively priced vehicles or the cost of the vehicles we purchase may increase significantly without a compensating increase in vehicle rental rates or residual values
3. 03We may not be able to effectively dispose of non-program vehicles, at the times or through the channels, that we desire
4. 04Our vehicle carrying costs, customer service scores and ability to dispose of vehicles at acceptable prices and times may be negatively impacted if we lengthen the age of our fleet
5. 05Our business, results of operations and financial condition are dependent on the efficient operation of a complex global supply chain. Disruption in that supply chain may adversely affect our ability to service demand, or to do so efficiently
6. 06The failure of a manufacturer of our program vehicles to fulfill its obligations under a repurchase or guaranteed depreciation program could expose us to losses on those program vehicles
7. 07Manufacturer safety recalls could require costly and time-consuming repairs to our fleet

RISKS RELATED TO OUR BUSINESS

1. 08Our vehicle rental business is particularly sensitive to reductions in the levels of business and leisure travel
2. 09Our business is highly seasonal, and any occurrence that disrupts rental activity during our peak periods could materially adversely affect our results of operations, financial condition, liquidity and cash flows
3. 10We may be unable to accurately estimate future levels of rental activity and adjust the number, location and mix of vehicles used in our rental operations accordingly
4. 11Our EV fleet exposes us to a number of risks
5. 12We may fail to adequately respond to changes in technology that are impacting the mobility industry
6. 13We face intense competition that may lead to downward pricing or an inability to increase prices
7. 14If our customers develop loyalty to internet travel intermediaries rather than our brands, our business and revenues could be adversely affected
8. 15Our commercial off airport leases and airport concession agreements expose us to numerous risks that could cause our financial results to suffer
9. 16Maintaining favorable brand recognition is essential to our success and failure to do so could materially adversely affect our business

RISK RELATED TO OUR EMPLOYEES

1. 17The ability to attract and retain front-line employees, senior management and other key personnel is critical to the success of our business
2. 18We may face issues with our union-represented employees

RISKS RELATED TO INFORMATION TECHNOLOGY, CYBERSECURITY AND PRIVACY

1. 19ITEM 1A. RISK FACTORS (Continued)
2. 20Our business is heavily reliant upon information technology systems, some of which are managed, hosted, provided or used by third parties, including cloud-based service providers, and any significant failures or disruptions to these systems could adversely impact our business
3. 21If we fail to evaluate, maintain, upgrade and consolidate our information technology systems, our business could be adversely affected
4. 22The misuse or theft of information we possess, including as a result of cybersecurity incidents, could harm our brand, reputation or competitive position and give rise to liabilities which may materially adversely affect our results of operations, financial condition, liquidity and cash flows
5. 23We may face particular data protection and privacy risks in connection with the European Union's Global Data Protection Regulation, the California Consumer Privacy Act and other privacy laws and regulations

RISKS RELATED TO LEGAL, REGULATORY AND TAX MATTERS

1. 24Our U.S. and foreign operations expose us to risks that may materially adversely affect our results of operations, financial condition, liquidity and cash flows
2. 25The disposition of revenue earning vehicles may result in taxable income, which might not be fully offset by the taxable expense associated with newly purchased revenue earning vehicles
3. 26Further, a material and extended reduction in vehicle purchases by our U.S. vehicle rental business, for any reason, would similarly limit the amount of tax expense available to offset the tax cost associated with the disposition of vehicles
4. 27Our ability to utilize our net operating loss carryforwards (“NOLs”) may be limited as a result of ownership change under Section 382 of the Code
5. 28We face risks related to liabilities and insurance
6. 29We are subject to an increasing number of federal, state, local and foreign laws and regulations relating to corporate and social responsibility matters, including environmental and climate change laws
7. 30Changes in the legal and regulatory environment that affect our operations could disrupt our business, increase our expenses or otherwise have a material adverse effect on our results of operations, financial condition, liquidity and cash flows
8. 31We are subject to many different forms of taxation in various jurisdictions throughout the world, which could lead to disagreements with tax authorities regarding the application of tax laws
9. 32An impairment of our long-lived assets could have a material impact on our results of operations
10. 33An impairment of our goodwill and other indefinite-lived intangible assets could have a material impact to our results of operations
11. 34Changes in management’s estimates and assumptions could have a material impact to our results of operations, financial condition, liquidity and cash flows
12. 35Our global business requires a compliance program to promote organizational adherence to applicable laws and regulations, and if the compliance program does not operate as designed, it can increase numerous risks to the Company
13. 36Hertz Holdings is a publicly traded holding company with no operations of its own and depends on its subsidiaries for cash
14. 37Failure to meet corporate and social responsibility expectations or standards or to advance our corporate responsibility priorities could adversely affect our business, results of operations and financial condition

RISKS RELATED TO OUR INDEBTEDNESS

1. 38Our indebtedness exposes us to various risks, which could impair our financial condition
2. 39Our reliance on asset-backed and asset-based financing arrangements to purchase vehicles subjects us to a number of risks, many of which are beyond our control
3. 40Substantially all of our consolidated assets secure certain of our outstanding indebtedness, which could materially adversely affect our debt and equity holders and our business
4. 41We may not be able to deduct certain business interest expenses, which could have a material adverse effect on our results of operations and liquidity

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

1. 42We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of our stock and could diminish our liquidity
2. 43The share price of our common stock may be volatile
3. 44In addition, stock markets experience significant price and volume fluctuations from time to time that are not related to the operating performance of particular companies. These market fluctuations may have a material adverse effect on the share price of our common stock
4. 45The choice of forum provision in the Certificate of Incorporation of Hertz Holdings could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or agents
5. 46A business continuity plan is necessary for our global business, and the failure of such plan may materially adversely affect our results of operations, financial condition, liquidity and cash flows
6. 47Our results of operations and share price could be materially adversely affected if we are unable to maintain effective internal control over financial reporting
7. 48We may use AI in our business, and challenges with properly managing its use could result in reputational harm, competitive harm and legal liability, and could have adverse effects on our results of operations, financial condition, liquidity and cash flows
8. 49We may pursue strategic transactions, including acquisitions and divestitures, which could be difficult to implement, disrupt our business or change our business profile significantly