Herc Holdings Inc. · NYSE:HRI

Herc — Q2 2017 Earnings Presentation

37 slides from Herc's earnings presentation, Aug 8, 2017

Slide 1: Second Quarter Earnings Conference Call
© 2017 Herc Rentals Inc. Click to edit Master title style Click to edit Master subtitle style Herc Holdings Inc. Second Quarter Earnings Conference Call for the period ending June 30, 2017 August 8, 2017
Slide 2: Agenda
© 2017 Herc Rentals Inc. Agenda 2NYSE: HRI Welcome and Introductions Elizabeth Higashi Vice President, Investor Relations Strategic Update and Industry Outlook Larry Silber President and Chief Executive Officer Q2 and First Half Financial Review Barbara Brasier Senior Vice President and Chief Financ
Slide 3: Safe Harbor Statements
© 2017 Herc Rentals Inc. Safe Harbor Statements 3NYSE: HRI Basis of Presentation The financial information included in this presentation is based upon the condensed consolidated financial statements of the Company which are presented in accordance with generally accepted accounting principles in the
Slide 4: Safe Harbor Statements - Continued
© 2017 Herc Rentals Inc. Safe Harbor Statements - Continued 4NYSE: HRI • Risks related to the spin-off, which effected our separation from New Hertz, such as: we have limited operating history as a stand-alone public company, and our historical financial information for periods prior to July 1, 2016
Slide 5: Safe Harbor Statements - Continued
© 2017 Herc Rentals Inc. Safe Harbor Statements - Continued 5NYSE: HRI o other operational risks such as: any decline in our relations with our key national account customers or the amount of equipment they rent from us; our equipment rental fleet is subject to residual value risk upon disposition,
Slide 6: Information Regarding Non-GAAP Financial Measures
© 2017 Herc Rentals Inc. Information Regarding Non-GAAP Financial Measures  In addition to results calculated according to accounting principles generally accepted in the United States (“GAAP”), the Company has provided certain information in this presentation which is not calculated according to G
Slide 7: Our First Anniversary as a Stand-alone Public Company
© 2017 Herc Rentals Inc. 7NYSE: HRI • Leveraging 50 years of knowledge and experience with a new name and brand • Driving initiatives to complete the separation from Hertz efficiently and effectively • Implementing the strategic decisions and business investments needed to drive profitable growth •
Slide 8: Decisions that Support Our Strategic Direction
© 2017 Herc Rentals Inc. Decisions that Support Our Strategic Direction Disciplined Capital Management IT Infrastructure North American Operations 8NYSE: HRI Discontinued development of new IT systems initiated prior to spin- off; will build on our current industry standard systems Signed agreement
Slide 9: Financial Highlights – Q2 2017
© 2017 Herc Rentals Inc. Financial Highlights – Q2 2017 9NYSE: HRI 1 Excluding impact of foreign currency translation. Key markets are defined as markets we currently serve outside of upstream oil and gas markets. 2 For a reconciliation to the most comparable GAAP financial measure, see the Appendix
Slide 10: Committed to Our Strategic Direction
© 2017 Herc Rentals Inc. Committed to Our Strategic Direction Disciplined Capital Management Expand and Diversify Revenues Improve Operating Effectiveness Enhance Customer Experience On the Path Forward • Broaden customer base • Expand products and services • Increase density • Grow ancillary revenu
Slide 11: Expand and Diversify Revenues: Strong Q2 Revenue Growth
© 2017 Herc Rentals Inc. Expand and Diversify Revenues: Strong Q2 Revenue Growth • Overall rental revenue growth accelerated in the second quarter and oil and gas markets appear to be stabilizing • Achieved above market growth • Strong performance from the coastal regions and major markets • Pricing
Slide 12: Expand and Diversify Revenues: Improving Fleet Mix
© 2017 Herc Rentals Inc. Expand and Diversify Revenues: Improving Fleet Mix 12NYSE: HRI Aerial - Booms 18.9% Aerial - Scissors & Other 7.2% Earthmoving - Heavy 9.3% Earthmoving - Compact 7.6%Material Handling- Telehandlers 13.4% Material Handling - Industrial 3.3% Trucks and Trailers 12.4% ProSoluti
Slide 13: Improve Operating Effectiveness: Improving Profitability
© 2017 Herc Rentals Inc. Improve Operating Effectiveness: Improving Profitability • Rental revenue growth of 7.0% exceeded growth in average OEC fleet of 4.7% reflecting improved volume, mix and pricing • $ Utilization of 34.0% for the second quarter improved 50 basis points versus the prior year, t
Slide 14: Improve Operating Effectiveness: Focus on Safety
© 2017 Herc Rentals Inc. Improve Operating Effectiveness: Focus on Safety • We highlighted our safety programs throughout June’s National Safety Month with special programs for our team members • Safety performance remains a major focus and the YTD total recordable incident rate (TRIR) declined 9% v
Slide 15: Enhance Customer Experience: Q2 2017 Highlights
© 2017 Herc Rentals Inc. Enhance Customer Experience: Q2 2017 Highlights • Introducing a new ProContractor campaign focused on implementation of OSHA requirements for controlling silica dust • Growing ProSolutions through customized solutions across a broad array of diverse industries • Developing n
Slide 16: Enhance Customer Experience: Investing in Technology
© 2017 Herc Rentals Inc. Enhance Customer Experience: Investing in Technology • Continuing to build out technology applications that help our customers work more efficiently, effectively and safely: • ProControl telematics applications are helping customer track performance, utilization and service
Slide 17: Strong Industry Outlook Supports Our Growth Proposition
© 2017 Herc Rentals Inc. $299.2 $307.9 2016 2017E Strong Industry Outlook Supports Our Growth Proposition Positive market growth and further penetration of rental solutions expected to continue 1 The American Institute of Architects (AIA). 2 ARA / IHS Global Insight as of July 2017, excludes Party &
Slide 18: Transformation in Process
© 2017 Herc Rentals Inc. Transformation in Process • Executing our strategy and driving improvements in operating performance • Successfully diversifying fleet mix to higher dollar utilization equipment categories • Achieving above market growth in major urban locations • Growing local rental revenu
Slide 20: Q2 and First Half Financial Summary
© 2017 Herc Rentals Inc. Q2 and First Half Financial Summary 20NYSE: HRI 1 For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on slide 29. $ in millions, except EPS Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Equipment Rental
Slide 21: Q2 and First Half Equipment Rental Revenues
© 2017 Herc Rentals Inc. $ 671.4 $0.9 $9.3 $45.9 $635.7 2016 Currency translation Key markets Oil and gas 2017 Q2 and First Half Equipment Rental Revenues $ in millions • Overall equipment rental revenues increased 7.0% in the second quarter, and 5.6% for the first half, achieving above market growt
Slide 22: Q2 and First Half Total Revenues
© 2017 Herc Rentals Inc. • Total revenues increased 9% for the second quarter year-over-year, and 8% for the first half • Sales of revenue earning equipment increased almost 50% in the second quarter versus the prior-year period • Continued aggressive fleet management to achieve our strategic goals
Slide 23: Net Loss Bridge
© 2017 Herc Rentals Inc. $(66.8) $0.1 $49.6 $29.3 $21.4 $9.7 $42.6 $10.2 ($9.5) (80) (60) (40) (20) 0 20 40 60 2016 Currency Translation Income tax benefit Spin-off costs Impairment Interest Expense Depreciation of REE All Other 2017 $(27.6) $0.1 $29.3 $18.3 $10.6 $2.4 $27.5 $8.6 ($8.0) (40) (30) (2
Slide 24: Q2 and First Half Adjusted EBITDA
© 2017 Herc Rentals Inc. 0 20 40 60 100 140 $ in millions Q2 Adjusted EBITDA Bridge Q2 and First Half Adjusted EBITDA1 • Strong equipment rental revenue growth was offset by operational and sales investments to promote future growth • The improvement in the results of the sales of revenue earning eq
Slide 25: Fleet at Original Equipment Cost
© 2017 Herc Rentals Inc.NYSE: HRI 25 1 Original equipment cost based on ARA guidelines. Fleet at Original Equipment Cost1 • Average fleet at OEC1 for the period ended June 30, 2017 • Increased 4.7% in Q2 2017 versus the prior-year period • Increased 5.0% in the first half 2017 versus the prior-year
Slide 26: Debt and Liquidity
© 2017 Herc Rentals Inc.NYSE: HRI 26 Debt and Liquidity Debt Liquidity $ in millions, as of 06/30/17 • Stable debt totaling $2.2 billion as of June 30, 2017 provides financial flexibility • Maintained ample liquidity during the quarter with $733 million as of June 30, 2017 • Net cash from operating
Slide 27: 2017 Full Year Guidance
© 2017 Herc Rentals Inc. 2017 Full Year Guidance1 NYSE: HRI 27  Trajectory of year-over-year rental revenue growth heading into seasonal peak  Stabilization of upstream oil and gas markets  Improved volume, mix and pricing  Growing rental revenue faster than fleet  Continuing focus on controlli
Slide 28: Q2 Key Takeaways
© 2017 Herc Rentals Inc.NYSE: HRI 28 We have achieved strong above market top-line growth We have made important strategic decisions that position us for the future We continued to invest in people, processes, and facilities to improve profitability in the long term We are affirming our 2017 guidanc
Slide 30: Definitions of Operating Measures
© 2017 Herc Rentals Inc. 30NYSE: HRI 1 OEC: Original Equipment Cost which is an operating measure based on the guidelines of the American Rental Association, which is calculated as the cost of the asset at the time it was first purchased plus additional capitalized refurbishment costs (with the basi
Slide 31: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
© 2017 Herc Rentals Inc. 31NYSE: HRI Reconciliation of Net Income to EBITDA and Adjusted EBITDA  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
Slide 32: Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
© 2017 Herc Rentals Inc. $ in millions Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net loss $ (27.6) $ (8.0) $ (66.8) $ (9.5) Provision for income taxes (22.2) 5.3 (37.3) 5.3 Interest expense, net 31.6 13.3 69.4 19.8 Depreciation of revenue earning equipment 94.3 84.2 1
Slide 33: Reconciliation of Free Cash Flow
© 2017 Herc Rentals Inc. 33NYSE: HRI 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 calculati
Slide 34: Reconciliation of Free Cash Flow
© 2017 Herc Rentals Inc. 34NYSE: HRI Reconciliation of Free Cash Flow $ in millions Six Months Ended June 30, 2017 2016 Net cash provided by operating activities $ 122.6 $ 208.1 Revenue earning equipment expenditures (160.8) (142.5) Proceeds from disposal of revenue earning equipment 88.6 74.2 Net F
Slide 35: Historic Fleet at Original Equipment Cost
© 2017 Herc Rentals Inc.NYSE: HRI 35 1 Original equipment cost based on ARA guidelines. Historic Fleet at Original Equipment Cost1 $ in millions Q1 2016 Q2 2016 Q3 2016 Q4 2016 Full Year 2016 Q1 2017 Q2 2017 First Half 2017 Beginning Balance – Fleet at OEC $3,384 $3,391 $3,537 $3,616 $3,384 $3,556 $
Slide 36: Expand and Diversify Revenues: Driving $ Utilization
© 2017 Herc Rentals Inc. Expand and Diversify Revenues: Driving $ Utilization 36NYSE: HRI Aerial - Booms 19.8% Aerial - Scissors & Other 6.2% Earthmoving - Heavy 11.7% Earthmoving - Compact 7.2% Material Handling- Telehandlers 13.5% Material Handling - Industrial 3.2% Trucks and Trailers 13.0% ProSo

Herc Holdings — Q2 2017 Earnings Presentation on 6ix

Herc — Q2 2017 Earnings Presentation

Slide 1: Second Quarter Earnings Conference Call

Slide 2: Agenda

Slide 3: Safe Harbor Statements

Slide 4: Safe Harbor Statements - Continued

Slide 5: Safe Harbor Statements - Continued

Slide 6: Information Regarding Non-GAAP Financial Measures

Slide 7: Our First Anniversary as a Stand-alone Public Company

Slide 8: Decisions that Support Our Strategic Direction

Slide 9: Financial Highlights – Q2 2017

Slide 10: Committed to Our Strategic Direction

Slide 11: Expand and Diversify Revenues: Strong Q2 Revenue Growth

Slide 12: Expand and Diversify Revenues: Improving Fleet Mix

Slide 13: Improve Operating Effectiveness: Improving Profitability

Slide 14: Improve Operating Effectiveness: Focus on Safety

Slide 15: Enhance Customer Experience: Q2 2017 Highlights

Slide 16: Enhance Customer Experience: Investing in Technology

Slide 17: Strong Industry Outlook Supports Our Growth Proposition

Slide 18: Transformation in Process

Slide 19: Financial Overview

Slide 20: Q2 and First Half Financial Summary

Slide 21: Q2 and First Half Equipment Rental Revenues

Slide 22: Q2 and First Half Total Revenues

Slide 23: Net Loss Bridge

Slide 24: Q2 and First Half Adjusted EBITDA

Slide 25: Fleet at Original Equipment Cost

Slide 26: Debt and Liquidity

Slide 27: 2017 Full Year Guidance

Slide 28: Q2 Key Takeaways

Slide 29: Appendix

Slide 30: Definitions of Operating Measures

Slide 31: Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Slide 32: Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

Slide 33: Reconciliation of Free Cash Flow

Slide 34: Reconciliation of Free Cash Flow

Slide 35: Historic Fleet at Original Equipment Cost

Slide 36: Expand and Diversify Revenues: Driving $ Utilization

Slide 37: 37NYSE: HRI