Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — Investor Presentation (May 2016)
41 slides from Hertz Global's investor presentation, May 11, 2016
Slide 1: Disclaimer
Disclaimer Certain statements contained in this presentation are “forward-looking statements.” Forward-looking statements include information concerning Hertz Equipment Rental Corporation, also referred to as “HERC”, “the Company” or “Herc Rentals” throughout this presentation, and include informati
Slide 2: Accounting Methodology
Accounting Methodology HERC full year 2015 and Q1 2016 operating results were reported as a business segment in the Hertz Global Holdings, Inc. (“Hertz”) Form 10-K filed on February 29, 2016 (as amended, the “Hertz 10-K”) and Form 10-Q filed on May 9, 2016, respectively. Financial results of HERC’s
Slide 3: Today's Presenters
Today’s Presenters 4 Elizabeth Higashi Vice President, Investor Relations Bruce Dressel Chief Operating Officer Barbara Brasier Senior Vice President and Chief Financial Officer Larry Silber President and Chief Executive Officer
Slide 4: Today's Presenters
Today’s Presenters viv Larry Silber President and \ Chief Executive Officer M Barbara Brasier Senior Vice President and Chief Financial Officer Bruce Dressel Chief Operating Officer Elizabeth Higashi Vice President, Investor Relations
Slide 5: Unique Opportunity to Build Value
Unique Opportunity to Build Value Strong brand recognition and reputation – 50+ years Attractive long term industry fundamentals Strategically positioned to generate above market growth Significant opportunity for operational and financial improvement Strong asset base including $3.5 billion of OEC
Slide 6: Highly Experienced Leadership Team
Highly Experienced Leadership Team Bruce Dressel COO 30+ years Chris Cunningham CHRO 30+ years Richard Marani CIO 30+ years Maryann Waryjas CLO 30+ years Larry Silber CEO 35+ years Barbara Brasier CFO 30+ years Regional Vice Presidents - Average of 24 Years of Industry Experience Industry savvy and
Slide 7: Quick Actions Result in Accelerating Profitability
Quick Actions Result in Accelerating Profitability Excluding Upstream Oil & Gas 7% 7% 11% 21% 14% Total Adjusted Corporate EBITDA (7)% (8)% (3)% 0% (4)% Rapid action to strengthen organization, fleet, and sales effectiveness accelerated quarterly growth 1 Data is based on constant FX rates as of Dec
Slide 8: Reinvigorated Organization With a Customer-Centric Culture
Reinvigorated Organization With a Customer-Centric Culture and Increased Focus on Operating Efficiency and Safety Our Vision We aspire to be the supplier, employer and investment of choice in our industry. Our Values We do what’s right. We’re in this together. We take responsibility. We achieve resu
Slide 9: Company Overview
Company Overview United 13%Rentals Sunbelt Rentals 7% One of the leading North American equipment rental companies Approximately 280 locations globally 4% market share in a highly fragmented market $1.6 billion in total revenue 1 (2015) $3.5 billion in fleet (OEC) ~ 4,500+ employees Upstream Oil & G
Slide 10: Market Leader with Significant Scale and Broad Footprint in North America
Market Leader with Significant Scale and Broad Footprint in North America • • • • • • Industry Rental Growth 1 4-Year CAGR ----· •• •. • • • >9% • • 6-9% • • 3-6% 0-3% • <0% • Here Rentals location Strong presence in growing regions 1IHS Gl-lmi!Tol (Apt 2016) 2 lntemaional q>eralions -!cealed nlheUn
Slide 11: Addressing Weakness in Oil & Gas Markets
Addressing Weakness in Oil & Gas Markets Upstream Oil & Gas 18% • Significant restructuring actions taken in Canada and Central regions to address upstream oil & gas weakness YoY % Change Total Excluding Upstream Oil & Gas Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 +11% +13% +13% +13% +12% • Disposed or redeploy
Slide 12: Construction and Industrial Outlook Positive
Construction and Industrial Outlook Positive ($ in billions) February 2016, Year Over Year 12.6% $289 $268 March 51.9 Total Construction Private Non-Residential Residential Public Construction 2015 2016E 2017E 2018E (in millions) ($ in billions) 6,672 $309.2 $302.6 2.4% 2.4% 2.3% % % Nov 2015 Dec 20
Slide 13: Strong Secular Equipment Rental Opportunity
Strong Secular Equipment Rental Opportunity Industry Growth Provides Unique Market dynamics favor growing trend of customers renting vs. owning equipment ($ in Billions) $58 - - - Frees up capital Provides flexibility to adjust operations and $55 $52 $50 cost base Allows third party to fulfill fleet
Slide 14: Long-Tenured National Account Base Provides Stable Portfolio
Long-Tenured National Account Base of Business Portfolio Provides Stable 2015 Sales by Account Type 2015 Over 1,800 National Accounts National Accounts 50% • • • Dedicated national account managers Stable revenue base Longer transactions Local 50% National Accounts by Tenure (Years) 3% 3% 5% 78% of
Slide 15: The Path Forward
The Path Forward Expand and Diversify Revenues Improve Operating Efficiencies Enhance Customer Experience Broaden customer base Expand products and services Increase density in large urban markets Grow branch revenues through price management and ancillary services Provide premium products and servi
Slide 16: Broaden N.A. Customer Base
Broaden N.A. Customer Base 2015 1 Target 40% New Customer Accounts National 40% National 50% 20% New Account Revenue Local 60% Total Revenue excluding Upstream Oil & Gas Markets Over 1,800 national accounts 12% Local 50% National accounts provide strong and stable base. Strategic sales initiatives a
Slide 17: Expand Products and Services to Drive Higher Revenue and Margin
Expand Products and Services to Drive Higher Revenue and Margin Specialty Solutions and ProContractor Tools ~25-30% Specialty Solutions and ProContractor Tools 15% Core 85% Core ~70-75% Focused on expanding Specialty Solutions and ProContractor Tools in N.A. 1 2 N.A. data. Industry data and estimate
Slide 18: Increase Density in Large Urban Markets
Increase Density in Large Urban Markets Southern California $2.0 bn 3% 9 53 BC AB SK MB Atlanta $822 mm 4% 8 49 ON QC WA ME MT ND MN VT OR NH MA WI ID MA SD MI NY WY RI PA CT NJ DE IA Washington DC / Baltimore NJ DE MD NE $1.3 bn 2% 4 52 NV IL UT WV IN CO KS CA MO KY South Florida (Miami) $833 mm 2%
Slide 19: Improve N.A. Vendor Management and Fleet Availability
Improve N.A. Vendor Management and Fleet Availability # of Suppliers Fleet Unavailable for Rent (FUR) 19% ~ 40% 18% Q2 2015 Current 2013 2014 2015 1Q2016Target Driving operational gains through buying efficiency and increased availability 20 15% 13% 10% 1 point of FUR reduction = $35M Fleet availabl
Slide 20: Drive Operating Performance through Higher Margin Mix and Volume
Drive Operating Performance through Higher Margin Mix and Volume EBITDA Margin by N.A. Branch Size 1 50% 45% 40% 35% 30% Small Medium Large Major Competitor 2 Significant operating leverage in current N.A. branch footprint 1 2 3 Represents management estimates for weighted average N.A. branch EBITDA
Slide 21: Supplier of Choice: Efficient, Effective and Safe
Supplier of Choice: Efficient, Effective and Safe Consultive solutions Subject-matter experts 22 Best in class brands combined with a comprehensive suite of services help customers work more efficiently, effectively and safely Providing Technology Solutions to Enhance Customer Experience Delivering
Slide 22: Introduce Innovative Customer Service Technological Solutions
Introduce Innovative Customer Service Technological Solutions to Enhance find a branch and get directions Integrated technology solutions to enhance customer solutions 23 Manage From Anywhere Mobile App allows managing fleet from anywhere Features include the ability to make reservations, view onlin
Slide 23: Key Initiatives to Fuel Profitability
Key Initiatives to Fuel Profitability improve $ utilization revenue recovery, and increasing productivity New initiatives expected to improve EBITDA margins 24 Improvement Opportunity Initiatives underway Shift Equipment Portfolio Mix Adding Specialty and ProContractor equipment to fleet expected to
Slide 24: Key Initiatives to Fuel Profitability
Key Initiatives to Fuel Profitability Improvement Opportunity Initiatives underway ‘Adding Specialty and ProContractor equipment to fleet expected to Shift Equipment Portfolio Mix Toe oc ule ton Y Driving transportation, Rental Protection Plan and other ancillary Ancillary Revenue revenue Branch Den
Slide 25: Financial Policy – Guiding Principles
Financial Policy – Guiding Principles 26 Maintain Sufficient Liquidity and Prudent Leverage (Target 2.5x – 3.5x leverage over the cycle) Pursue Operating Strategy that Enables Flexibility and Cost Management in All Market Conditions Exercise Disciplined Capital Allocation Focus on Improving Margins
Slide 26: Historical Financial Profile – Form 10 As Reported
Historical Financial Profile – Form 10 As Reported $ in millions $ in millions $1,771 $1,736 $1,678 50% $681 $650 $601 45% 40% $400 35% '13 % Revenue Growth '14 '15 30% $0 25% '13 '14 '15 Equipment Rental Sale of Equipment, Service and Other $ in millions $540 Same store revenue growth2 10.0% 5.0% (
Slide 27: Quarterly Growth: Revenue and Adjusted Corporate EBITDA
Quarterly Growth: Revenue and Adjusted Corporate EBITDA Excluding Upstream Oil & Gas, Improved Each Quarter 1 Data is based on segment reported as a part of Hertz Global Holdings on a constant FX rates as of December 31, 2015 and excluding France and Spain operations sold in October 2015. 28 Adj. Co
Slide 28: 1Q:16: Focused on Expanding Revenue and Operational Efficiencies
1Q:16: Focused on Expanding Revenue and Operational Efficiencies Revenue Growth and Expansion1 – Q1:16 versus Q1:15 • Total revenues excluding upstream oil & gas branch markets increased 12% Worldwide pricing was flat, but pricing excluding oil & gas branch markets was up 1% New account revenue incr
Slide 29: $3.5 Billion in Fleet
$3.5 Billion in Fleet at an Average Age of 47 Months 1Q Capital Expenditures Fleet Mix by OEC • Positive $6 million net fleet capex Other 17% Aerial 27% Electrical 9% Truck 11% Material Handling 17% Earthmoving 19% Average fleet original equipment cost (OEC) as of March 31, 2016. 30
Slide 30: 2016 Segment Guidance
2016 Segment Guidance 1 The guidance presented herein speaks only as of May 10, 2016 and shall not be deemed to be a reiteration or affirmation of the guidance or an indication that the Company’s expectation have not changed since that time. *Adjusted Corporate EBITDA Guidance excludes the standalon
Slide 31: RAC and HERC Remain On Track for mid-2016 Separation
RAC and HERC Remain On Track for mid-2016 Separation • Form 10 Update - - - Initial Form 10 filed 12/21/15 Amendment #1 filed 2/4/16 Amendment #2 filed 4/18/2016: included FY:15 results • Operational Readiness Update - - - Senior leadership team in place Prospective Board of Directors recruiting on
Slide 32: Our Vision
Our Vision Supplier of Choice Employer of Choice Investment of Choice 33
Slide 33: Our Vision
Our Vision 22 Lat) Investment of Choice k 4
Slide 34: Glossary of Terms
Glossary of Terms 1 2 3 5 6 7 35 8ROIC: Latest 12-months After-Tax Adjusted Net Income and 5 pt. Average Invested Capital (ex. Intangibles, Goodwill, Inter-company Receivables & Payables, Investment in Subs and Deferred Tax Liabilities). RPP: Rental Protection Program EES: Environmental & Emissions
Slide 35: Glossary of Terms – continued
Glossary of Terms – continued EBITDA:The sum of net income, provision for income taxes, interest expense, net, depreciation of revenue earning 10 Adjusted EBITDA: EBITDA plus the sum of the merger and acquisition related costs, restructuring and restructuring 10 36 Adjusted EBITDA Margin:Adjusted EB
Slide 36: Valuable and Diverse Asset Base
Valuable and Diverse Asset Base ($ in millions) $2,940 Fixed Assets/Others, NBV 1 HERC maintains a substantial asset base supported by a diverse fleet mix Note: As of December 31, 2015. NBV denotes Net Book Value. 1 2 Other Fixed Assets / Others include Net PP&E only. Fleet includes Net Revenue Earn
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation $ in Millions Net Income Provision for taxes on income $ 98.1 55.0 $ 89.7 54.8 $ 111.3 45.6 Interest expense, net 72.9 41.4 32.9 Depreciation of revenue earning equipment 325.3 340.0 343.7 Non-rental depreciation and amortization 68.9 75.1 77.2 EBITDA $620.2 $601.0 $610.7 Res
Slide 38: Executive Biographies
Executive Biographies Lawrence H. Silber President and Chief Executive Officer Mr. Silber joined HERC in May 2015. Mr. Silber most recently served as an Executive Advisor at Court Square Capital Partners, LLP. Mr. Silber led Hayward Industries, one of the world's largest swimming pool equipment manu
Slide 39: Executive Biographies - continued
Executive Biographies - continued Maryann A. Waryjas Senior Vice President , Chief Legal Officer and Secretary Ms. Waryjas joined HERC in November 2015 from Great Lakes Dredge & Dock Corporation, one of the largest providers of dredging services in the United States. At Great Lakes, Ms. Waryjas serv
Slide 40: Herc Rentals
HercRentals™ HeieRentats· 42
Slide 41: Herc Rentals
HercRentals”
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