Herc Holdings Inc. · NYSE:HRI

Herc — Non-Deal Roadshow (December 2019)

35 slides from Herc's roadshow presentation, Dec 9, 2019

  1. Slide 1: Herc Holdings Inc. Investor Presentation

    Herc Holdings Inc. Investor Presentation New York December 9, 2019 ©2019 Herc Rentals Inc. All Rights Reserved.

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

    Safe Harbor Statements and Non-GAAP Financial Measures Forward-Looking Statements • issues we face with environmental, health and safety laws and regulations and the costs of complying with them; This presentation includes "forward-looking statements," as that term is defined by the • difficulty in

  3. Slide 3: A Leader in the Equipment Rental Industry

    A Leader in the Equipment Rental Industry • 50+ years of experience in the equipment rental industry • One of the leading equipment rental suppliers in North America • Listed on the New York Stock Exchange on July 1, 2016 under the symbol "HRI" • Approximately 270 locations in 39 states and seven Ca

  4. Slide 4: Vision, Mission and Values

    Vision, Mission and Values We are a customer-centric organization focused on safety, efficiency and profitable growth . . NYSE: HRI 4 ©2019 Herc Rentals Inc. All Rights Reserved.

  5. Slide 5: Aligning our Performance with a Shared Purpose

    Aligning our Performance with a Shared Purpose We equip our customers and communities to build a brighter future NYSE: HRI 5 ©2019 Herc Rentals Inc. All Rights Reserved.

  6. Slide 6: Company Overview

    Company Overview 2018 ESTIMATED MARKET SHARE1 TOTAL REVENUES $ in millions 3% 2018 Market Size: ~$55 billion ADJUSTED EBITDA NET RESULTS2 $ in millions $ in millions 1. Source: ARA IHS Global Insights February 2019, company reports; updated in June 2019. 2. Net results include a net tax benefit of $

  7. Slide 7: Focus on Quality of Earnings Delivered Strong Results

    Focus on Quality of Earnings Delivered Strong Results Our strategic initiatives drove improved pricing and rental margins We achieved excellent REBITDA flow-through and improved margin from reduced expenses We are managing fleet capital expenditures and disposals to improve utilization NYSE: HRI 7 ©

  8. Slide 8: 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 • Broaden customer • Focus on safety, • Provide premium • Drive EBITDA talent base labor productivity

  9. Slide 9: Expanding Products and Services to Meet Customer Needs

    Expanding Products and Services to Meet Customer Needs CLASSIC PROSOLUTIONS PROCONTRACTOR Our classic fleet includes aerial, ProSolutionsTM, our industry-specific ProContractor specialty equipment earthmoving, material handling, solutions-based services, includes power includes professional grade to

  10. Slide 10: Safety is at the Cornerstone of Everything We Do

    Safety is at the Cornerstone of Everything We Do All branches achieved ≥ 90% Perfect Days through the third quarter of 2019 The Perfect Day • No OSHA recordable incidents • No "at fault" motor vehicle accidents • No DOT violations Ultimate goal is zero incidents and a safe environment for our team a

  11. Slide 11: Q3 and Nine Months Financial Summary

    Q3 and Nine Months Financial Summary Three Months Ended September 30, Nine Months Ended September 30, $ in millions, except per share data 2019 2018 % Chg. 2019 2018 % Chg. Equipment Rental Revenue $459.6 $449.0 2.4% $1,244.8 $1,210.6 2.8% Total Revenues $508.1 $516.2 (1.6)% $1,458.9 $1,433.0 1.8% N

  12. Slide 12: Continuing Rate Performance and Improving Utilization

    Continuing Rate Performance and Improving Utilization YOY CHANGE IN PRICING1 • YoY pricing improved 4.5% in Q3 2019, the 14th consecutive quarter of year-over-year improvement • Total OEC at quarter end was $3.94 billion, with an increase of average fleet at OEC of 0.4% for Q3 • Average fleet on ren

  13. Slide 13: Improving Fleet Mix to Drive Growth

    Improving Fleet Mix to Drive Growth $ UTILIZATION1 • $ utilization in Q3 2019 increased 160 bps YoY to 40.8% • Average fleet age improved to 44 months in Q3 2019 from 46 months in Q3 2018 FLEET COMPOSITION AT OEC1,2 % OF SELECTED FLEET AT OEC1 VS. PRIOR YEAR $3.94 billion at OEC 1 ProSolutions™ 14.9

  14. Slide 14: Improving Customer Mix and Diversification

    Improving Customer Mix and Diversification Q3 LOCAL VS NATIONAL % MIX1 Q3 REVENUE BY CUSTOMER1,2 Q3 LOCAL VS NATIONAL YOY GROWTH1 • Local rental revenue grew 4.9% YoY in Q3 2019 and now accounts for 61% of total rental revenue • Local branch sales initiatives are driving strong growth in new custome

  15. Slide 15: Industry Outlook

    Industry Outlook ARCHITECTURE BILLINGS INDEX1 N.A. EQUIPMENT RENTAL MARKET2 as of October 2019 ($ in billions) as of November 2019 October 52.0 50 NON-RESIDENTIAL STARTS3 INDUSTRIAL SPENDING4 ($ in billions) ($ in billions) as of October 2019 as of October 2019 1. Source: The American Institute of A

  16. Slide 16: Focusing on High Growth Urban Markets

    Focusing on High Growth Urban Markets Strong geographic footprint in high growth markets Approximately 270 locations, principally in North America1 • 39 states • 7 provinces Targeting four to six greenfield locations in 2019 Source: ARA IHS Global Insights November 2019 1. Locations as of September

  17. Slide 17: Managing Fleet at OEC to Improve Utilization

    Managing Fleet at OEC1 to Improve Utilization FLEET ENDING BALANCE AT OEC • Average fleet at OEC increased 0.4% in Q3 2019 over the prior-year quarter and increased 0.3% for $ in billions the nine months • Fleet expenditures at OEC in Q3 2019 were $172 million with disposals of $89 million at averag

  18. Slide 18: Disciplined Capital Management

    Disciplined Capital Management NET LEVERAGE1 LIQUIDITY $ in millions September 30, 2019 ABL and AR Facility $1,925.0 Outstanding (927.0) Letters of Credit (21.5) Availability from ABL and AR Facility $976.5 Cash & Cash Equivalents 34.5 Q3 2018 Q4 2018 Q3 2019 Total Liquidity $1,011.0 • Net leverage

  19. Slide 19: Our Strategic Initiatives are Delivering Results

    Our Strategic Initiatives are Delivering Results Our strategic initiatives continued to drive growth in rental revenues and $ utilization in our latest quarter • We improved adjusted EBITDA margin 220 basis points to 41.2% • We increased $ utilization 160 basis points to 40.8% • We improved YTD free

  20. Slide 20: Appendix

    Appendix HercRentals

  21. Slide 21: 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

  22. Slide 22: Q3 and Nine Months Total Revenues

    Q3 and Nine Months Total Revenues Q3 BRIDGE NINE MONTHS BRIDGE $ in millions $ in millions Q3 TOTAL REVENUES • Total revenues decreased 1.6%, or $8.1 million, in Q3 2019 • Equipment rental revenue increased 2.4% in Q3 2019 ◦ Improvements in pricing and mix ◦ Strategic reductions in re-rent revenue •

  23. Slide 23: Q3 and Nine Months Adjusted EBITDA

    Q3 and Nine Months Adjusted EBITDA1 Q3 BRIDGE NINE MONTHS BRIDGE $ in millions $ in millions 2 2 Q3 ADJUSTED EBITDA1 • YoY adjusted EBITDA increased $7.9 million or 3.9% in Q3 2019 • Higher equipment rental revenue of $11.1 million was the largest contributor to the improvement • DOE increased $3.0

  24. Slide 24: Q3 and Nine Months Net Results

    Q3 and Nine Months Net Results Q3 BRIDGE NINE MONTHS BRIDGE $ in millions $ in millions $0 $0 Q3 NET RESULTS • Net income was $9.4 million in Q3 2019 compared to $46.2 million in the prior year • Interest expense increased in Q3 2019 primarily due to costs related to the redemption of the company's

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

    Reconciliation of Adjusted Net Income and Adjusted Earnings Per Diluted Common 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 d

  26. Slide 26: Reconciliation of Net Income to Adj. EBITDA, REBITDA

    Reconciliation of Net Income to Adj. EBITDA, Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through EBITDA, Adjusted EBITDA, and Rental Adjusted EBITDA (REBITDA) are not recognized terms under GAAP and should not be considered in isolation or as a substitute for our report

  27. Slide 27: Reconciliation of Net Income to Adj. EBITDA and REBITDA

    Reconciliation of Net Income to Adj. EBITDA and REBITDA Calculation of Adjusted EBITDA Margin, REBITDA Margin and REBITDA Flow-Through $ in millions Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net income $9.4 $46.2 $12.4 $35.8 Income tax provision (benefit) (

  28. Slide 28: REBITDA Margin Trend

    REBITDA Margin Trend $ in millions Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Q2 2019 Q3 2019 Total Revenues $431.3 $485.5 $516.2 $543.7 $1,976.7 $475.7 $475.1 $508.1 Less: Sales of rental equipment 47.3 78.2 50.1 80.6 256.2 85.1 51.3 35.4 Less: Sales of new equipment, parts and supplies 11.4 1

  29. Slide 29: Reconciliation of Net Leverage Ratio

    Reconciliation 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

  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 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Q2 2019 Q3 2019 Beginning Balance $3,651 $3,732 $3,873 $3,922 $3,651 $3,777 $3,694 $3,859 Expenditures $198 $321 $171 $84 $774 $103 $289 $172 Disposals ($109) ($179) ($126) ($193) ($607) ($193) ($123) ($89) Foreig

  32. Slide 32: Q3 and Nine Months Net Results Bridge

    Q3 and Nine Months Net Results Bridge Three Months Ended September 30, Elements of Net Income (Loss) Bridge Currency1 Income Spin-off Depreciation of Interest $ in millions 2019 2018 $ Change impact tax All other costs rental equip. expense Total revenues $508.1 $516.2 ($8.1) ($0.7) $— $— $— $— ($7.

  33. Slide 33: SG&A Excluding Spin-off Costs

    SG&A Excluding Spin-off Costs Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Q2 2019 Q3 2019 $ in millions SG&A $74.5 $77.3 $78.4 $82.4 $312.6 $71.5 $73.5 $76.2 Spin-off costs ($4.9) ($3.9) ($1.7) ($3.9) ($14.4) $— ($0.3) ($0.4) SG&A excluding Spin-off costs $69.6 $73.4 $76.7 $78.5 $298.2 $71.5 $73

  34. Slide 34: Fleet Mix: Driving $ Utilization

    Fleet Mix: Driving $ Utilization OEC AS OF 09/30/181 OEC AS OF 09/30/191 $3.92 billion $3.94 billion 1. Original equipment cost based on ARA guidelines NYSE: HRI 34 ©2019 Herc Rentals Inc. All Rights Reserved.

  35. Slide 35: NYSE: HRI ©2019 Herc Rentals Inc. All Rights Reserved.

    NYSE: HRI 35 ©2019 Herc Rentals Inc. All Rights Reserved.

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