Herc Holdings Inc. · NYSE:HRI
Herc — Northcoast Research Investor Meetings - Boston (June 2019)
31 slides from Herc's conference presentation, Jun 6, 2019
Slide 1: Herc Holdings Inc. Investor Presentation
Herc Holdings Inc. Investor Presentation June 4-6, 2019 ©2019 Herc Rentals Inc. All Rights Reserved.
Slide 2: Safe Harbor Statements
Safe Harbor Statements Forward-Looking Statements ◦ some or all of our deferred tax assets could expire if we experience an “ownership change” as defined in the Internal Revenue Code; This presentation contains statements, that are not statements of historical fact, but instead are forward-looking s
Slide 3: Safe Harbor Continued and Non-GAAP Financial Measures
Safe Harbor Continued and Non-GAAP Financial Measures if New Hertz fails to pay its tax liabilities under the tax matters agreement Information Regarding Non-GAAP Financial Measures or to perform its obligations under the separation and distribution agreement, we could incur significant tax and othe
Slide 4: 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
Slide 5: 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 $
Slide 6: Herc Rentals Corporate History & Key Events
Herc Rentals Corporate History & Key Events Financial Strategic Growth / Consolidation Path Forward Crisis Changes Launched industry-first online rental Larry Silber • Acquired account named HERC management • Acquired CEO and began New HERC President building new Introduced Entered Launc
Slide 7: Vision, Mission and Values
Vision, Mission and Values We are a customer-centric organization focused on safety, efficiency and profitable growth . . NYSE: HRI 7 ©2019 Herc Rentals Inc. All Rights Reserved.
Slide 8: Highly Experienced Leadership Team
Highly Experienced Leadership Team EXECUTIVE LEADERSHIP CEO, CFO & COO Average More Than 25 Years of Equipment Industry Experience Larry Silber Mark Irion Bruce Dressel Chris Cunningham Tamir Peres Maryann Waryjas CEO CFO COO CHRO CIO CLO 35+ years 20+ years 30+ years 30+ years 20+ years 30+ years S
Slide 9: Focus on Safety First
Focus on Safety First NYSE: HRI 9 ©2019 Herc Rentals Inc. All Rights Reserved.
Slide 10: Strong Industry Outlook Supports Our Growth
Strong Industry Outlook Supports Our Growth ARCHITECTURE BILLINGS INDEX1 N.A. EQUIPMENT RENTAL MARKET2 as of April 2019 ($ in billions) as of February 2019 April 50.5 50 NON-RESIDENTIAL STARTS3 INDUSTRIAL SPENDING4 ($ in billions) ($ in billions) as of February 2019 as of April 2019 1. Source: The A
Slide 11: 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
Slide 12: 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
Slide 13: Focusing on High Growth Urban Markets
Focusing on High Growth Urban Markets Approximately 270 locations, principally in North America1 • 39 states • 7 provinces Targeting four to six greenfield locations in high-growth urban markets in 2019 Source: ARA IHS Global Insights February 2019 1. Locations as of March 31, 2019 NYSE: HRI 13 ©201
Slide 14: Q1 Financial Summary
Q1 Financial Summary Three Months Ended March 31, $ in millions, except per share data 2019 2018 % Chg. Equipment Rental Revenue $377.6 $369.1 2.3% Total Revenues $475.7 $431.3 10.3% Net Loss $(6.7) $(10.1) 33.7% Diluted Loss Per Share $(0.23) $(0.36) 36.1% Adjusted EBITDA1 $142.3 $132.7 7.2% Adjust
Slide 15: Continuing Strong Performance
Continuing Strong Performance YOY CHANGE IN PRICING1 • YoY pricing improved 3.8% in Q1 2019, the 12th consecutive quarter of year-over-year improvement • Total OEC at year end was $3.69 billion, an increase of average fleet at OEC of 2.0% for Q1 • Average fleet on rent in Q1 2019 was flat compared t
Slide 16: Improving Fleet Mix to Drive Growth
Improving Fleet Mix to Drive Growth $ UTILIZATION1 • $ utilization in Q1 2019 increased 20 bps YoY to 35.5% • Average fleet age improved to 46 months in Q1 2019 from 49 months in Q1 2018 FLEET COMPOSITION AT OEC1,2 % OF SELECTED FLEET AT OEC1 VS. PRIOR YEAR $3.69 billion at OEC 1 ProSolutions™ 14.7%
Slide 17: Improving Customer Mix and Diversification
Improving Customer Mix and Diversification Q1 LOCAL VS NATIONAL % MIX1 Q1 REVENUE BY CUSTOMER1,2 Q1 LOCAL VS NATIONAL YOY GROWTH1 • Local rental revenue grew 10% YoY in Q1 2019 • Local rental revenue accounts for 58% of the total • Growth in new customer accounts remains strong 1. North America rent
Slide 18: Fleet at Original Equipment Cost (OEC)
Fleet at Original Equipment Cost (OEC)1 FLEET ENDING BALANCE AT OEC • Total fleet at OEC was $3.69 billion as of $ in billions March 31, 2019 • Average fleet at OEC increased 2.0% in Q1 2019 over the prior-year quarter • Fleet expenditures at OEC in Q1 2019 were $103 million • Average fleet age impr
Slide 19: Disciplined Capital Management
Disciplined Capital Management NET LEVERAGE1 LIQUIDITY $ in millions March 31, 2019 ABL and AR Facility $1,925.0 Outstanding (1,151.0) Letters of Credit (24.6) Availability from ABL and AR Facility $749.4 Cash & Cash Equivalents 24.5 Q1 2018 Q4 2018 Q1 2019 Total Liquidity $773.9 • Net leverage of ~
Slide 20: Appendix
Appendix
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
Slide 22: Reconciliation of Net Income to Adj. EBITDA, Adj. EBITDA Margin, REBITDA, REBITDA Margin 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 Rental Adjusted EBITDA (REBITDA) are not recognized terms under GAAP and should not be considered in isolation or as a substitute for our report
Slide 23: 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 March 31, 2019 2018 Net income (loss) ($6.7) ($10.1) Income tax provision (benefit) (3.1) (5.1) Interest expense, net 32.9 32.0 Depr
Slide 24: REBITDA Margin Trend
REBITDA Margin Trend $ in millions Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Total Revenues $431.3 $485.5 $516.2 $543.7 $1,976.7 $475.7 Less: Sales of rental equipment 47.3 78.2 50.1 80.6 256.2 85.1 Less: Sales of new equipment, parts and supplies 11.4 10.8 14.2 12.9 49.3 10.9 Equipment rental
Slide 25: 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
Slide 26: 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 27: Historical Fleet at OEC
Historical Fleet at OEC1 $ in millions Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Beginning Balance $3,651 $3,732 $3,873 $3,922 $3,651 $3,777 Expenditures $198 $321 $171 $84 $774 $103 Disposals ($109) ($179) ($126) ($193) ($607) ($193) Foreign Currency / Other ($8) ($1) $4 ($36) ($41) $7 Ending
Slide 28: Net Results Bridge
Net Results Bridge Three Months Ended March 31, Elements of Net Income (Loss) Bridge Depreciation Currency Income Spin-off Interest $ in millions 2019 2018 $ Change impact 1 tax of rental All other costs expense equipment Total revenues $475.7 $431.3 $44.4 ($2.7) $— $— $— $— $47.1 Direct operating 1
Slide 29: SG&A Excluding Spin-off Costs
SG&A Excluding Spin-off Costs Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 $ in millions SG&A $74.5 $77.3 $78.4 $82.4 $312.6 $71.5 Spin-off costs ($4.9) ($3.9) ($1.7) ($3.9) ($14.4) $0.0 SG&A excluding Spin-off costs $69.6 $73.4 $76.7 $78.5 $298.2 $71.5 % of Total Revenue 16.1% 15.1% 14.9% 14.4%
Slide 30: Fleet Mix: Driving $ Utilization
Fleet Mix: Driving $ Utilization OEC AS OF 03/31/181 OEC AS OF 03/31/191 $3.73 billion $3.69 billion 1. Original equipment cost based on ARA guidelines NYSE: HRI 30 ©2019 Herc Rentals Inc. All Rights Reserved.
Slide 31: NYSE: HRI
NYSE: HRI 31 ©2019 Herc Rentals Inc. All Rights Reserved.
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