Herc Holdings Inc. · NYSE:HRI
Herc — Q3 2016 Earnings Presentation
30 slides from Herc's earnings presentation, Nov 8, 2016
Slide 1: Herc Holdings Inc. Q3 and Nine Months ended September 30, 2016
Herc Holdings Inc. Q3 and Nine Months ended September 30, 2016 November 8, 2016
Slide 2: Agenda
Agenda 2 Welcome and Introductions Elizabeth Higashi Vice President, Investor Relations Strategic Update and Industry Outlook Larry Silber President and Chief Executive Officer Q3 and Nine Months Financial Review Barbara Brasier Senior Vice President and Chief Financial Officer Q&A Larry Silber Barb
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 Business risks could have a material adverse effect on our business, results of operations, financial condition and/or liquidity, including: • the cyclicality of our business, a slowdown in economic conditions or adverse changes in the economic factors specific t
Slide 5: Safe Harbor Statements - Continued
Safe Harbor Statements - Continued • other operational risks such as: any decline in our relations with our key national or industrial account customers or the amount of equipment they rent from us; any inability to accurately estimate future levels of rental activity and adjust the size and mix of
Slide 6: 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, net revenue earn
Slide 7: 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. Q3 2016 First Quarter as a Stand-Alone Public Company • First quarter as a stand-alone public company since we separated from Hertz • Began trading on the NYSE on July 1 under the symbol “HRI” • Branch locations rebrand
Slide 8: Financial Highlights Q3 2016
Financial Highlights 8 Q3 2016 Equipment Rental Revenue • Reported $360.3 million in the quarter • Excluding operations in France & Spain and impact of foreign currency translation1: + 7.2% YoY in key markets2, which represented 84% of total + 1.4% YoY overall Q3 2016 Pricing + 1.8% YoY in key
Slide 9: On the Path Forward
On the Path Forward 9NYSE: HRI • Herc Holdings began trading on the NYSE on July 1, 2016 Herc Holdings Spin Expand and Diversify Revenues Improve Operating Efficiencies Enhance Customer Experience On the Path Forward • Broaden customer base • Expand products and services • Increase density • Grow an
Slide 10: Expand and Diversify Revenues
Expand and Diversify Revenues Expanded sales force and optimized sales territories Shifted focus to core premium brands and ProSolutions™ and Pro Contractor™ equipment Increased local rental revenue to 54% of total as we focused on improving branch density in urban markets Increased ancillar
Slide 11: Improve Operating Efficiencies
Improve Operating Efficiencies Reduced FUR to 13.0% in September 2016 compared to 13.8% in the prior year Implemented CRM system (Salesforce.com) to expand and share best practices and enhance salesforce effectiveness Progressed implementation of operating model throughout the entire organizat
Slide 12: Enhance Customer Experience
Enhance Customer Experience Grew ProSolutions services such as Climate Control and Restoration and Remediation Renovated branches to showcase ProContractor Tools Enhanced ProControl™ telematics for year end rollout Continued upgrades in mobile app and new website, which were introduced on Ju
Slide 13: Industry Outlook Highlights
Industry Outlook Highlights Positive market growth and further penetration of rental solutions expected to continue 1 The American Institute of Architects (AIA). 2 IHS Global Insight as of October 2016, excludes Party & Event data. 3 Dodge Analytics. 4 Industrial information resources. $36$38$38 $31
Slide 14: Financial Overview
Financial Overview 14
Slide 15: Q3 and YTD 2016 GAAP Summary
Q3 and YTD 2016 GAAP Summary 15NYSE: HRI $ in millions, except EPS Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Equipment rental revenues $ 360.3 $ 373.2 $ 996.0 $ 1,052.5 Total revenue 403.6 431.8 1,149.6 1,255.8 Net income (loss) 3.0 20.8 (6.5) 33.1 Diluted
Slide 16: Q3 and YTD 2016 Equipment Rental Revenues
Q3 and YTD 2016 Equipment Rental Revenues 16 Q3 Equipment Rental Revenue $ in millions YTD Equipment Rental Revenue Equipment rental revenue increased +7.2% in key markets, excluding divestitures and currency ProSolutions and ProContractor are gaining traction Pricing increased 1.8% YoY in key
Slide 17: Q3 and YTD 2016 Total Revenues
17NYSE: HRI Used equipment sales declined YoY due to lower amount of fleet ready for disposal New equipment sales were also lower due to focus on higher margin rental activities rather than sales Q3 Total Revenues Q3 Total Revenue Bridge YTD Total Revenues YTD Total Revenue Bridge $ in millions
Slide 18: Q3 and YTD 2016 Adjusted EBITDA
18NYSE: HRI Q3 Adjusted EBITDA YTD Adjusted EBITDA $ in millions Q3 Adjusted EBITDA Bridge YTD Adjusted EBITDA Bridge $152.1 $5.3 $3.5 $5.4 $6.2 $160.1 120 125 130 135 140 145 150 155 160 165 2015 France & Spain and currency translation Loss on sales of revenue earning equipment Key markets Oil and
Slide 19: Q3 and YTD 2016 Net Income
19NYSE: HRI Q3 Net Income YTD Net Income $ in millions Q3 Net Income Bridge YTD Net Income Bridge Increase in spin-off costs: IT and professional expenses related to the spin transaction First full quarter of interest expense on Company’s debt on a stand-alone basis Q3 and YTD Summary Q3 and YTD
Slide 20: Capital Expenditures - Fleet
Capital Expenditures - Fleet 20 Average fleet original equipment cost (OEC). NYSE: HRI Continued to add core premium brands, ProSolutions™ and ProContractor™ equipment to improve our fleet and customer mix and $ Utilization Rental equipment at original equipment cost (OEC) 2 was $3.62 billion as
Slide 21: Debt and Liquidity
Debt and Liquidity 21 Debt Ample Liquidity $ in millions, as of 9/30/16 $852.0 $610.0 $625.0 '16 '17 '18 '19 '20 '21 '22 '23 '24 Total Liquidity $ 927.0 Cash and Cash Equivalents 51.9 ABL Availability 875.1 Facility 1,750.0 Outstanding (852.0) Letters of Credit (22.9) ABL Credit Facility Senior Secu
Slide 22: In Summary
In Summary • Gained traction in new products • Accelerated branch performance in urban markets • Improved operating efficiencies • Improved sales force effectiveness through training and productivity tools • Achieved growth in ancillary revenues • Safety is our #1 priority throughout the organizatio
Slide 23: Appendix
Appendix 23
Slide 24: Glossary of Terms Commonly Used in the Industry
Glossary of Terms Commonly Used in the Industry 24NYSE: HRI OEC: Original Equipment Cost; the cost of the asset at the time it was first purchased including additional capitalized refurbishment costs (with the basis of refurbished assets reset at the refurbishment date). 1 Fleet Age: The OEC weighte
Slide 25: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA 25NYSE: HRI EBITDA and Adjusted EBITDA are not recognized terms 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 identi
Slide 26: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA 26 $ in millions Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Net income (loss) $ 3.0 $ 20.8 $ (6.5) $ 33.1 Provision for income taxes 3.7 14.7 9.0 28.7 Interest expense, net 32.3 9.3 52.1 27.8 Depreci
Slide 27: Reconciliation to Adjust for Divestitures and Foreign Currency Translation
27 Nine months ended September 30, 2016 Actual Sale of France and Spain Foreign Currency Translation Nine months ended September 30, 2016 Adjusted Total revenues $ 1,149.6 $ 0 $ 7.6 $ 1,157.2 Equipment rental revenue 996.0 0 6.2 1,002.2 Reconciliation to Adjust for Divestitures and Foreign Currency
Slide 28: Net Revenue Earning Equipment Expenditures
Net Revenue Earning Equipment Expenditures 28 $ in millions Nine months ended September 30, 2016 2015 Expenditures: Revenue earning equipment expenditures (cash flow basis) $ 325.7 $ 537.8 Purchases of revenue earning equipment in accounts payable-equipment 119.1 1.2 Total revenue earning equipment
Slide 29: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation 29 $ in millions Nine months ended September 30, 2016 Net cash provided by operating activities $ 370.9 Revenue earning equipment expenditures (325.7) Proceeds from disposal of revenue earning equipment 99.0 Property and equipment expenditures (29.2) Proceeds from dispo
Slide 30: Herc Rentals
HercRentals”