Herc Holdings Inc. · NYSE:HRI
Herc — Q2 2016 Earnings Presentation
30 slides from Herc's earnings presentation, Aug 9, 2016
Slide 1: Herc Holdings Inc. Q2 and First Half Results
Herc Holdings Inc. Q2 and First Half Results August 9, 2016
Slide 2: Agenda
Agenda 2 Welcome and Introductions Elizabeth Higashi Vice President, Investor Relations Overview of Q2 and YTD Results Larry Silber President and Chief Executive Officer Financial Review Barbara Brasier Senior Vice President and Chief Financial Officer Industry Outlook Larry Silber Q&A Larry Silber
Slide 3: Safe Harbor Statements
Safe Harbor Statements Basis of Presentation The financial information included in this presentation is based upon the condensed consolidated and combined financial statements of the Company which are presented on a basis of accounting that reflects a change in reporting entity and have been adjuste
Slide 4: Safe Harbor Statements - Continued
Safe Harbor Statements - Continued • Risks related to the securities market and ownership of our stock, including that an active trading market for our common stock may not be sustained and the market price of our common stock may fluctuate significantly; our accounting and other management systems
Slide 5: Reconciliation to GAAP
Reconciliation to GAAP In addition to results calculated according to accounting principles generally accepted in the United States (“GAAP”), the Company has provided certain information in this release which is not calculated according to GAAP (“non-GAAP”), such as Adjusted EBITDA and certain reven
Slide 6: We aspire to be the supplier, employer and investment of choice in our industry
We aspire to be the supplier, employer and investment of choice in our industry. Spin Accomplished • Herc Rentals separated from Hertz’s rental car business on June 30, 2016 in a tax-free transaction and began trading on the NYSE on July 1, 2016 • As part of the transaction, Herc Rentals issued $1.2
Slide 7: Transformation in Process
Transformation in Process Implementing initiatives to improve operating efficiencies and drive revenue growth Built an organization to support stand alone public company requirements Positioned organization for transformation 7NYSE: HRI
Slide 8: Q2 2016 Results
Q2 2016 Results 8 Equipment Rental Revenue • Reported $327.9 million in the quarter • Excluding operations in France & Spain and impact of foreign currency translation: o + 0.1% overall o + 8.1% in key markets1, which represented 84% of total Pricing • +0.5% YoY $ Utilization • 33.5%, a decrease of
Slide 9: Q2 2016 and YTD Highlights
Q2 2016 and YTD Highlights Continued to right size fleet in upstream oil and gas markets and reduced non-premium brands Made strategic changes to deemphasize low margin new equipment sales, including eliminating certain equipment distributorships Opened four North America locations to support
Slide 10: Continuing to Integrate New Technologies
Continuing to Integrate New Technologies Optimus - Pricing tool gaining acceptance and traction Mobile App launched July 1 −More than 8,000 registered users (to date) Salesforce.com − Fully deployed throughout the North America organization −Qualified leads are pushed to sales teams − Provides p
Slide 11: Financial Overview
Financial Overview 11
Slide 12: Q2 and YTD 2016 GAAP Summary
Q2 and YTD 2016 GAAP Summary 12NYSE: HRI $ in millions, except EPS Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 Rental revenue $ 327.9 $ 347.7 $ 635.7 $ 679.3 Total revenue 380.4 422.7 746.0 824.0 Adjusted EBITDA 130.6 147.3 238.4 276.7 Net income (loss) (8.0) 10.6 (9.5)
Slide 13: Q2 and YTD 2016 Equipment Rental Revenues
1 For a reconciliation to the closest GAAP equivalent, see Appendix beginning on slide 25. Q2 and YTD 2016 Equipment Rental Revenues (excluding France and Spain and Foreign Currency Translation)1 13 Q2 Equipment Rental Revenue $ in millions $643.8 $641.6 0 100 200 300 400 500 600 700 800 900 2015 20
Slide 14: Q2 and YTD 2016 Total Revenues
Q2 and YTD 2016 Total Revenues (excluding France and Spain and Foreign Currency Translation)1 14NYSE: HRI YTD rental revenues were about flat Used equipment sales declined YoY because the amount of fleet ready for disposal was lower New equipment sales were also lower due to focus on higher ma
Slide 15: Q2 and YTD 2016 Adjusted EBITDA
Q2 and YTD 2016 Adjusted EBITDA (excluding France and Spain and Foreign Currency Translation) 1 15NYSE: HRI Q2 Adjusted EBITDA YTD Adjusted EBITDA $267.3 $239.7 $9.4 0 50 100 150 200 250 300 350 400 2015 2016 $147.3 Higher proportion of sales through auction channels Oversupply of certain catego
Slide 16: Revenue Earning Equipment
Revenue Earning Equipment 16 Average fleet original equipment cost (OEC). NYSE: HRI Herc Rentals acquired $305.5 million of OEC in the first half of 2016 compared to $437.3 million in 2015 Additions were managed prudently as we improved FUR and absorbed oil and gas fleet while continuing to add
Slide 17: Debt
Debt Ample liquidity and long-dated maturities provide financial flexibility 1 Total ABL facility size of $1,750 million. $ in millions As of June 30, 2016 Borrowing Against New Senior ABL 1 $ 839 7.50% Senior Secured Second Priority Notes due 2022 610 7.75% Senior Secured Priority Notes due 2024 62
Slide 18: Updated Full Year 2016 Guidance
Updated Full Year 2016 Guidance* Adjusted EBITDA: $520 million to $560 million Net Fleet Capital Expenditures (Revenue earning equipment expenditures less proceeds from disposals of such equipment): $375 million to $400 million 18NYSE: HRI Herc Holdings does not provide forward-looking guidance for
Slide 19: Equipment Rental Industry Update
Equipment Rental Industry Update
Slide 20: Equipment Rental Industry Update
Equipment Rental Industry Update Strong market growth and further penetration of rental solutions expected to continue 1 IHS Global Insight as of July 2016, excludes Party & Event data. 2 Source: As reported by RER 100 in May 2016: Top Rental Equipment Companies of 2015 ranked by revenue. $36 $38 $3
Slide 21: Construction and Industrial Outlook
Construction and Industrial Outlook Construction and industrial markets expected to grow Non-Residential Starts 1 Construction Put in Place 2 Architecture Billings Index 3 Construction Employment 4 Industrial Spending 5 $302.6 $308.0 2015 2016E Ja n- 96 Ja n- 00 Ja n- 04 Ja n- 08 Ja n- 12 Ja n- 16 R
Slide 22: Unique Opportunity to Build Value
Unique Opportunity to Build Value Attractive long term industry fundamentals Significant opportunity for operational and financial improvement Commitment to disciplined capital management Strong asset base including $3.5 billion of OEC Strategically positioned to generate above market growth Strong
Slide 23: Q&A
Q&A 23NYSE: HRI
Slide 24: Appendix
Appendix 24NYSE: HRI
Slide 25: Glossary of Terms Commonly Used in the Industry
Glossary of Terms Commonly Used in the Industry 25NYSE: HRI OEC: Original Equipment Cost; the cost of the asset at the time it was first purchased.1 Fleet Age: The OEC weighted age of the entire fleet. 2 Net Fleet Capex: Capital expenditures of revenue earning equipment minus the proceeds from dispo
Slide 26: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA 26NYSE: HRI EBITDA and Adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to the most comparable GAAP amounts. Further, since all companies do not use identical calculations, our definition and presenta
Slide 27: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA 27 $ in millions Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 Net income (loss) $ (8.0) $ 10.6 $ (9.5) $ 12.3 Provision for income taxes 5.3 9.0 5.3 14.0 Interest expense, net 13.3 9.0 19.8 18.5 Depreciation of r
Slide 28: Reconciliation to Adjust for Divestitures and Foreign Currency Translation
28 Six months ended June 30, 2016 Actual Sale of France and Spain Foreign Currency Translation Six months ended June 30, 2016 Adjusted Total revenues $ 746.0 $ 0 $ 7.3 $ 753.3 Equipment rental revenue 635.7 0 5.9 641.6 Adjusted EBITDA 238.4 0 1.3 239.7 Reconciliation to Adjust for Divestitures and F
Slide 29: 2015 Quarterly Reconciliation excluding France & Spain
29 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Full Year Equipment Rentals $ 331.6 $ 347.7 $ 373.1 $ 359.2 $1,411.6 France & Spain (17.2) (18.3) (17.6) (6.5) (59.6) Equipment Rentals excluding France & Spain operations $ 314.4 $ 329.4 $ 355.5 $ 352.7 $ 1,352.0 2015 Quarterly Reconciliation excluding France & Sp
Slide 30: Herc Rentals
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