Herc Holdings Inc. · NYSE:HRI

Herc — Q1 2020 Earnings Presentation

35 slides from Herc's earnings presentation, Apr 23, 2020

  1. Slide 1: Herc Holdings Inc. Q1 2020 Earnings Conference Call

    Larry Silber President & Chief Executive Officer Aaron Birnbaum Senior Vice President & Chief Operating Officer Mark Irion Senior Vice President & Chief Financial Officer Elizabeth Higashi, CFA Vice President, Investor Relations HERC HOLDINGS INC. Q1 2020 EARNINGS CONFERENCE CALL April 23, 2020 ©202

  2. Slide 2: Safe Harbor Statements and Non-GAAP Financial Measures

    Safe Harbor Statements and Non-GAAP Financial Measures Forward-Looking Statements Information Regarding Non-GAAP Financial Measures This presentation includes forward-looking statements as that term is In addition to results calculated according to accounting principles defined by the federal securi

  3. Slide 3: Business Priorities

    Business Priorities Health and Safety Committed to keeping our team, their families, our customers and communities safe Resilient Business Model Diverse customer base, many in essential industry sectors should help mitigate some of the impact of the COVID-19 pandemic Contingency Planning Accelerated

  4. Slide 4: Health and Safety

    Health and Safety We are committed to the safety of our team, their families, our customers and communities Quickly Implemented Frequent Organizational Ongoing Updates to Actions to Reduce Spread Communications Operating Procedures • Restricted non-essential travel • Daily COVID-19 bulletins • Close

  5. Slide 5: Q1 2020 Takeaways - Onset of COVID-19 Related Disruption

    Q1 2020 Takeaways - Onset of COVID-19 Related Disruption Improved pricing helped offset lower volume in the quarter We achieved excellent flow-through from better operating efficiencies We have ample liquidity to fund our business operations and activities NYSE: HRI 5 ©2020 Herc Rentals Inc. All Rig

  6. Slide 6: First Quarter 2020 Highlights

    First Quarter 2020 Highlights Equipment Rental Revenue Q1 Net Loss $386.5M 2.4% YoY $3.7M Total Revenues Q1 $436.2M (8.3)% YoY Loss Per Diluted Share Adjusted $0.13 EBITDA1 Q1 $147.7M 3.8% YoY 1. For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on Slide

  7. Slide 7: Q1 2020 Operations Review

    Q1 2020 OPERATIONS REVIEW NYSE: HRI 7 ©2020 Herc Rentals Inc. All Rights Reserved.

  8. Slide 8: COVID-19 Impact and Response

    COVID-19 Impact and Response Impact on Industry Sectors Taking Actions to Curb Costs • Film and TV productions, music • In markets where projects were festivals and sports events were postponed, when possible fleet left on canceled or postponed site; secured, but taken off rent • Construction sites

  9. Slide 9: Managing $3.80B Fleet at OEC

    Managing $3.80B Fleet at OEC1 Fleet Composition at OEC1 Fleet Expenditures at OEC $ in millions 2019 2020 Trucks & $289 Trailers $172 $103 $109 13.9% $63 Other Material 7.9% Q1 Q2 Q3 Q4 Handling 17.4% Fleet Disposals at OEC $ in millions 2019 2020 Specialty $193 $188 $110 $123 22.1% $89 Earthmoving

  10. Slide 10: Resilient Business Model with Diverse Customer Mix

    Resilient Business Model with Diverse Customer Mix Q1 Revenue by Customer1,2 Our diverse customer mix and base of national Other 19% customers mitigates some of the impact in this Contractors 32% COVID-19 business downturn We are actively supporting the construction and Infrastructure and Government

  11. Slide 11: Q1 Financial Review

    Q1 FINANCIAL REVIEW NYSE: HRI 11 ©2020 Herc Rentals Inc. All Rights Reserved.

  12. Slide 12: Q1 Financial Summary

    Q1 Financial Summary Three Months Ended March 31, $ in millions, except per share data 2020 2019 % Chg. Equipment Rental Revenue $386.5 $377.6 2.4% Total Revenues $436.2 $475.7 (8.3)% Net Income (Loss) $(3.7) $(6.7) 44.8% Earnings (Loss) Per Diluted Share $(0.13) $(0.23) 43.5% Adjusted Net Income (L

  13. Slide 13: Pricing and Utilization Performance

    Pricing and Utilization Performance Pricing1 Average Fleet at OEC1 2019 2020 2019 2020 4.6% 4.5% 2.0% 3.8% 1.7% 3.3% 0.4% 0.7% 2.4% (1.3)% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2 $ Utilization Average Fleet on Rent at OEC1 2019 2020 2019 2020 40.8% 40.5% 38.0% 0.0% (0.3)% 35.6% 35.7% (1.3)% (2.0)% (1.6)% Q1 Q2 Q3

  14. Slide 14: Q1 Adjusted EBITDA

    Q1 Adjusted EBITDA1 Q1 Adjusted EBITDA Bridge +3.8% Adjusted EBITDA increased $5.4 million YoY or $ in millions 3.8% in Q1 2020 primarily due to higher equipment rental revenue of $9.2 million $9.2 $0.5 $1.6 $147.7 $142.3 $(0.6) $(4.7) $(0.6) DOE decreased $0.5 million in Q1 2020 primarily due to st

  15. Slide 15: Disciplined Capital Management

    Disciplined Capital Management Maturities $39M $ in millions, as of 03/31/2020 Free cash flow1 of $39.2 million in Q1 2020 $1,200.0 Senior Unsecured Notes $776.0 $55.5 ABL Credit AR Finance Leases and Other Borrowings Facility Facility2 2020-2024+ 2.7x $40.0 1 Net leverage of 2.7x with compared 2020

  16. Slide 16: Rapidly Changing Industry Outlook

    Rapidly Changing Industry Outlook Architecture Billings Index1 U.S. Nonresidential Building Starts2 Millions Sq. Ft. as of April 2020 March 33.3 50 1 5 6 7 8 9 0 2 3 4 5 6 7 8 9 0 1 0 0 0 0 0 1 1 1 1 1 1 1 1 1 2 - - - - - - - - - - - - - - - - n n n n n n n n n n n n n n n n a a a a a a a a a a a a

  17. Slide 17: COVID-19 Impact to Date

    COVID-19 Impact to Date Withdrawing 2020 guidance given uncertainty related to future impact of COVID-19 Economic Outlook Impact on Our Business • The economy has turned negative faster than any • Event and entertainment business was stopped time in recent history • National accounts business is mor

  18. Slide 18: Business Priorities

    Business Priorities Health and Safety Committed to keeping our team, their families, our customers and communities safe Resilient Business Model Diverse customer base, many in essential industry sectors should help mitigate some of the impact of the COVID-19 pandemic Contingency Planning Accelerated

  19. Slide 19: Appendix

    APPENDIX NYSE: HRI 19 ©2020 Herc Rentals Inc. All Rights Reserved.

  20. Slide 20: Our Strategic Initiatives

    Our Strategic Initiatives Develop Our Expand and Improve Enhance Disciplined People and Diversify Operating Customer Capital Culture Revenues Effectiveness Experience Management Attract and retain talent Broaden customer Focus on safety, labor Provide premium Drive EBITDA margin base productivity, a

  21. Slide 21: Focusing on High Growth Urban Markets

    Focusing on High Growth Urban Markets 39 states 275 6 provinces Approximately 275 locations, principally in North America1 Strong geographic footprint in high growth markets Source: ARA IHS Global Insights February 2020 NYSE: HRI 21 1. Locations as of March 31, 2020 ©2020 Herc Rentals Inc. All Right

  22. Slide 22: Glossary of Terms Commonly Used in the Industry

    Glossary of Terms Commonly Used in the Industry OEC: Original Equipment Cost which is an operating measure based on the guidelines of the American Rental Association (ARA), which is calculated as the cost of the asset at the time it was first purchased plus additional capitalized refurbishment costs

  23. Slide 23: Q1 Total Revenues

    Q1 Total Revenues Q1 Revenue Bridge +2.4% $ in millions Equipment rental revenue increased 2.4% in Q1 2020 with improvements in pricing and mix, partially $475.7 $9.2 $436.2 offset by lower volume $(0.4) $(45.0) $(3.3) Sales of rental equipment decreased 53.0% in Q1 2020 Total revenues decreased 8.3

  24. Slide 24: Q1 Net Results

    Q1 Net Results Net loss was $3.7 million in Q1 2019 compared to $6.7 million in the prior year Q1 Net Results Bridge $ in millions Interest expense in Q1 2020 was favorable $8.5 $8.5 $6.0 million primarily related to lower interest expense on the Company's Notes and lower average outstanding $(3.7)

  25. Slide 25: Reconciliation of Adjusted Net Income and Adjusted Earnings Per Diluted Share

    Reconciliation of Adjusted Net Income and Adjusted Earnings Per Diluted Share Adjusted Net Income and Adjusted Earnings Per Diluted Share - Adjusted Net Income represents the sum of net income (loss), restructuring and restructuring related charges, spin-off costs, loss on extinguishment of debt, im

  26. Slide 26: Reconciliation of Net Income to Adj. EBITDA, REBITDA and Flow-Through

    Reconciliation of Net Income to Adj. EBITDA, Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through EBITDA, Adjusted EBITDA, and REBITDA - EBITDA represents the sum of net income (loss), provision (benefit) for income taxes, interest expense, net, depreciation of rental eq

  27. Slide 27: Reconciliation of Net Income to Adj. EBITDA, REBITDA Margin and Flow-Through

    Reconciliation of Net Income to Adj. EBITDA, Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through $ in millions Three Months Ended March 31, 2020 2019 Net income (loss) ($3.7) ($6.7) Income tax provision (benefit) 1.1 (3.1) Interest expense, net 24.4 32.9 Depreciation of

  28. Slide 28: REBITDA Margin Trend

    REBITDA Margin Trend $ in millions Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019 Q1 2020 Total Revenues $475.7 $475.1 $508.1 $540.1 $1,999 $436.2 Less: Sales of rental equipment 85.1 51.3 35.4 71.0 242.8 40.0 Less: Sales of new equipment, parts and supplies 10.9 13.2 10.0 9.9 44.0 7.0 Equipment rental, se

  29. Slide 29: Calculation of Net Leverage Ratio

    Calculation of Net Leverage Ratio Net Leverage Ratio –The Company has defined its net leverage ratio as net debt, as calculated below, divided by adjusted EBITDA for the trailing twelve-month period. This measure should be considered supplemental to and not a substitute for financial information pre

  30. Slide 30: Reconciliation of Free Cash Flow

    Reconciliation of Free Cash Flow Free cash flow is not a recognized term under GAAP and should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP. Further, since all companies do not use identical calculations, our definition and presentation

  31. Slide 31: Historical Fleet at OEC

    Historical Fleet at OEC1 $ in millions Q1 Q2 Q3 Q4 Q1 FY 2019 2019 2019 2019 2019 2020 Beginning Balance $3,777 $3,694 $3,859 $3,943 $3,777 $3,822 Expenditures $103 $289 $172 $63 $627 $109 Disposals ($193) ($123) ($89) ($188) ($593) ($110) Foreign Currency / Other $7 ($1) $1 $4 $11 ($21) Ending Bala

  32. Slide 32: Q1 Net Results Bridge

    Q1 Net Results Bridge Three Months Ended March 31, Elements of Net Income (Loss) Bridge 1 Depreciation of Interest $ in millions 2020 2019 $ Change Currency Income tax Impairment All other impact rental equip. expense Total revenues $436.2 $475.7 ($39.5) ($0.4) $— $— $— $— ($39.1) Direct operating 1

  33. Slide 33: Fleet Mix

    Fleet Mix March 31, 2019 March 31, 2020 Aerial - Booms 17.9% 17.6% Aerial - Scissors & Other 7.6% 7.6% Earthmoving - Compact 8.5% 8.0% Earthmoving - Heavy 5.9% 5.5% Material Handling - Telehandlers 13.3% 13.4% Material Handling - Industrial 4.2% 4.0% Trucks and Trailers 12.9% 13.9% ProSolutions® 14.

  34. Slide 34: Consistent Organic Growth Since Spin-off

    Consistent Organic Growth Since Spin-off Equipment Rental Revenue Adjusted EBITDA1 $ in millions $ in millions $741.0 $746.4 ’16-‘19 CAGR: 8.0% $1,701.8 $1,710.7 ’16-‘19 CAGR: 11.4% $1,658.3 $684.8 $1,499.0 $585.4 $536.2 $1,352.7 2016 2017 2018 2019 Q1 2020 TTM 2016 2017 2018 2019 Q1 2020 TTM Net Le

  35. Slide 35: NYSE: HRI ©2020 Herc Rentals Inc. All Rights Reserved.

    NYSE: HRI ©2020 Herc Rentals Inc. All Rights Reserved.

Herc Holdings — Q1 2020 Earnings Presentation on 6ix