Herc Holdings Inc. · NYSE:HRI
Herc — Q1 2024 Earnings Presentation
32 slides from Herc's earnings presentation, Apr 23, 2024
Slide 1: Scaling for Sustainable Growth
Scaling for Sustainable Growth Q1 2024 EARNINGS CONFERENCE CALL April 23, 2024
Slide 2: Herc Rentals Team and Agenda
Herc Rentals Team and Agenda Agenda Safe Harbor Q1 2024 Overview Q1 Operations Review Q1 Financial Review 2024 Outlook Larry Silber Aaron Birnbaum Mark Humphrey Leslie Hunziker President & Chief Senior Vice President Senior Vice President Senior Vice President Q&A Executive Officer & Chief Operating
Slide 3: 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 defined In addition to results calculated according to accounting principles generally by the fede
Slide 4: First Quarter 2024: Accelerating Performance
First Quarter 2024: Accelerating Performance Equipment Rental Revenue Total Revenues Adjusted EBITDA¹ $ in millions $719 $ in millions $804 $ in millions $339 $654 $740 $308 10% $568 9% $527 10% $453 $237 $436 $387 $400 $184 $147 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023
Slide 5: Q1 2024: Delivering on Growth Strategies
Q1 2024: Delivering on Growth Strategies Optimize branch network for fleet / operating efficiencies at scale Strategies to Accelerate • Completed 4 acquisitions - 11 locations; opened 4 greenfield locations ROIC and Increase Enhance fleet mix Shareholder Returns: • Expanded OEC specialty fleet YoY;
Slide 6: Operations Review
Operations Review Aaron Birnbaum Senior Vice President and Chief Operating Officer Herc Holdings Inc. NYSE: HRI Q1 2024 6
Slide 7: Focusing on Safety
Focusing on Safety 1Q 2024: Continuing focus on Perfect Days • All branches reported > 97% Perfect Days • Perfect Days are those with no: • OSHA reportable incidents • At-fault moving vehicle accidents • DOT violations Total Recordable Incident Rate Improved to 0.76 —below 1.0 industry standard Prov
Slide 8: Scaling for Sustainable Growth: Expanding Through Acquisitions and Greenfields
Scaling for Sustainable Growth Expanding Through Acquisitions and Greenfields Adding locations increases density and share in urban markets • 412 locations at March 31, 2024, +13% YoY Targeting Top 100 metropolitan markets • 1Q:24: 4 acquisitions - 11 locations; 4 greenfield locations • 1Q:24: Inves
Slide 9: Optimizing Fleet Mix and Lifecycle Performance
Optimizing Fleet Mix and Lifecycle Performance Fleet Expenditures at OEC1 $6.4 billion at OEC1,2 $ in millions 2023 2024 Specialty $400 Other $348 22% $274 24% $196 $167 Fleet Q1 Q2 Q3 Q4 Composition Fleet Disposals at OEC1 Material 19% $ in millions Handling 24% 2023 2024 Aerial $309 11% $186 $174
Slide 10: Delivering Growth and Resiliency through Diversification
Delivering Growth and Resiliency through Diversification Contractors 36% Q1 Revenue 28% Industrial Q1 Local vs. 45% National by Customer1 National Mix Local 55% 6% Other 14% 16% Commercial Facilities Infrastructure & Government • Local account revenue increased due to acquisitions and greenfields, a
Slide 11: Capitalizing on Growth Trends Across Diverse Customer and Project Base
Capitalizing on Growth Trends Across Diverse Customer and Project Base Infrastructure Commercial Contractors (36%) Industrial (28%) Other (6%) & Gov. Direct (16%) Facilities (14%) • Electrical • Agriculture • Aerospace • Airports • Banks • Sporting Events • General Contractors • Chemical Processing
Slide 12: Financial Review
Financial Review Mark Humphrey Senior Vice President and Chief Financial Officer
Slide 13: Q1 2024 Financial Results
Q1 2024 Financial Results Three Months Ended March 31, 2024 vs 2023 % 2024 2023 $ in millions, except per share data Change Equipment Rental Revenue $719 $654 10% Total Revenues $804 $740 9% Net Income $65 $67 (3)% Earnings Per Diluted Share $2.29 $2.28 —% Adjusted Net Income1 $67 $69 (3)% Adjusted
Slide 14: Q1 2024 Equipment Rental Revenue and Adjusted EBITDA Bridge
Q1 2024 Equipment Rental Revenue and Adjusted EBITDA Bridge Equipment Rental Revenue Adjusted EBITDA $719 $339 $654 $308 2023 Pricing OEC on Ancillary Other Inflation Studio 2024 2023 Equipment Gain on DOE SG&A Studio Other 2024 Rent Entertainment Rental Sale of Entertainment Revenue Rental Equipmen
Slide 15: Q1 2024 Financial Results Excluding Cinelease Studio Entertainment
Q1 2024 Financial Results Excluding Cinelease Studio Entertainment Three Months Ended March 31, 2024 vs 2023 % 2024 2023 $ in millions Change Core Equipment Rental Revenue $690 $635 9% Core Total Revenues $774 $720 8% Core Net Income $58 $73 (21)% Core Adjusted EBITDA1 $329 $306 8% Core Adjusted EBI
Slide 16: Disciplined Capital Management
Disciplined Capital Management Maturities • No near-term maturities and ample liquidity2 of $1.4 As of March 31, 2024 billion provide financial flexibility $ in millions • Free cash flow of $92 million for the first quarter • Net leverage3 of 2.5x, unchanged from December 2023 ABL Credit Facility an
Slide 17: Continued Strength in Key End Markets
Continued Strength in Key End Markets N.A. Equipment Rental Market1 Industrial Spending2 $ in billions $ in billions $442 $436 $94 $87 $90 $83 $412 $406 $77 $396 $69 $60 $61 $57 $55 $52 $352 $328 $317 $317 — — — — — — — — — — — — — — — — — — $310 $309 17 18 19 20 21 22 23 24E 25E 26E 27E 17 18 19 20
Slide 18: Affirming 2024 Guidance Excluding Cinelease
Affirming 2024 Guidance Excluding Cinelease Metric 2023 Excluding Cinelease 2024 Full Year Guidance Equipment Rental Revenue $2,820 million +7% to 10% Adjusted EBITDA $1,462 million $1.55 billion to $1.60 billion Net Rental Equipment Expenditures after Gross $500 to $700 million after gross $995 mil
Slide 19: Purpose, Vision, Mission and Values
Purpose, Vision, Mission and Values We equip our customers and communities to build a brighter future Herc Holdings Inc. NYSE: HRI Q1 2024 19
Slide 20: Appendix
Appendix oe a aw .
Slide 21: Glossary of Terms Commonly Use in the Industry
Glossary of Terms Commonly Use 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
Slide 22: Cinelease Studio Entertainment Assets Held for Sale
Cinelease Studio Entertainment Assets Held for Sale Cinelease is Herc's studio management and lighting and grip business • Market preference for lighting and grip equipment to be part of studio ownership • Owning studio real estate does not align with Herc strategy • Lighting and grip equipment repr
Slide 23: Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, REBITDA
Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through EBITDA, Adjusted EBITDA, and REBITDA - EBITDA represents the sum of net income, provision (benefit) for income taxes, interest expense, net, depreciation of rental equipm
Slide 24: Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, REBITDA
Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through $ in millions Three Months Ended March 31, 2024 2023 Net income $65 $67 Income tax provision 16 8 Interest expense, net 61 48 Depreciation of rental equipment 160 152 Non
Slide 25: Reconciliation Excluding Studio Entertainment
Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through, Excluding Studio Entertainment $ in millions Three Months Ended March 31, 2024 2024 2023 Herc Studio Entertainment Herc, excl Studio Herc Studio Entertainment Herc, excl
Slide 26: REBITDA Margin and Flow-Through Quarterly Trend
REBITDA Margin and Flow-Through Quarterly Trend $ in millions Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Net income $67 $76 $113 $91 $347 $65 Income tax provision 8 27 33 32 100 16 Interest expense, net 48 54 60 62 224 61 Depreciation of rental equipment 152 161 167 163 643 160 Non-rental depre
Slide 27: REBITDA Margin and Flow-Through Annual Trend
REBITDA Margin and Flow-Through Annual Trend $ in millions 2019 2020 2021 2022 2023 Net income $47 $74 $224 $330 $347 Income tax provision 16 20 67 104 100 Interest expense, net 174 93 86 122 224 Depreciation of rental equipment 410 403 420 536 643 Non-rental depreciation and amortization 62 63 68 9
Slide 28: Reconciliation of Net Income and Adjusted Earnings Per Diluted Share
Reconciliation of 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, transaction related costs, restructuring and restructuring related charges, spin-off costs, loss on extinguishment
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 pr
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
Slide 31: Historical Fleet at OEC
Historical Fleet at OEC1 $ in millions FY 2019 FY 2020 FY 2021 FY 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Beginning Balance $3,777 $3,822 $3,589 $4,381 $5,637 $5,915 $6,211 $6,217 $5,637 $6,328 Expenditures 627 348 725 1,218 348 400 274 196 1,218 167 Disposals (593) (552) (281) (322) (1
Slide 32: For additional information, please contact:
For additional information, please contact: Leslie Hunziker SVP Investor Relations, Communications & Sustainability leslie.hunziker@hercrentals.com 239-301-1675 Herc Holdings Inc. NYSE: HRI Q1 2024 32