Herc Holdings Inc. · NYSE:HRI
Herc — Q1 2017 Earnings Presentation
32 slides from Herc's earnings presentation, May 9, 2017
Slide 1: First Quarter Earnings Conference Call
Click to edit Master title style Click to edit Master subtitle style Herc Holdings Inc. First Quarter Earnings Conference Call for the period ending March 31, 2017 May 9, 2017
Slide 2: Agenda
Agenda 2NYSE: HRI Welcome and Introductions Elizabeth Higashi Vice President, Investor Relations Strategic Update and Industry Outlook Larry Silber President and Chief Executive Officer Q1 Financial Review Barbara Brasier Senior Vice President and Chief Financial Officer Q&A Larry Silber Barbara Bra
Slide 3: Safe Harbor Statements
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 on a basis of accounting that reflects a change in reporting entity and have been adjusted
Slide 4: Safe Harbor Statements - Continued
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, is not necessarily repr
Slide 5: Safe Harbor Statements - Continued
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, and may not sell at the p
Slide 6: Information Regarding Non-GAAP Financial Measures
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 GAAP (“non-GAAP”), such as
Slide 7: Q1 Key Takeaways
Q1 Key Takeaways Our strategy is driving strong top- line growth We are making investments to transform the business We are investing in the activities to support a stand- alone public company We are affirming our 2017 guidance and are on track with our five-year business transformation We remain co
Slide 8: Financial Highlights – Q1 2017
Financial Highlights – Q1 2017 8NYSE: HRI 1 Excluding impact of foreign currency translation. 2 Key markets are defined as markets we currently serve outside of upstream oil and gas markets, overall refers to all markets. 3 For a reconciliation to the most comparable GAAP financial measure, see the
Slide 9: Strategic Direction
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 revenues • Focus on safety and labor productivit
Slide 10: Expand and Diversify Revenues: Q1 2017 Highlights
Expand and Diversify Revenues: Q1 2017 Highlights • Rental revenue growth accelerated throughout the first quarter • The West and Southeast were especially strong; the Midwest region is also improving • Pricing was strong in key markets, particularly in the U.S. in both national and local accounts •
Slide 11: Improve Operating Effectiveness: Q1 2017 Highlights
Improve Operating Effectiveness: Q1 2017 Highlights • Safety performance continued to improve in the first quarter compared with prior year – with the YTD total recordable incident rate (TRIR) declining approximately 14% • Opened three greenfield locations • Made additional investment in sales and t
Slide 12: Enhance Customer Experience: Q1 2017 Highlights
Enhance Customer Experience: Q1 2017 Highlights • New Customer Care and telesales initiatives are paying off through increased sales and new leads • We are continuing to: – Expand ProSolutions Centers of Excellence - now in 32 locations – Upgrade branches to showcase ProContractor equipment o 35 bra
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 ARA / IHS Global Insight as of May 2017, excludes Party & Event data. 3 Dodge Analytics. 4 Industrial information resources. ($ in billi
Slide 14: Transformation in Process
Transformation in Process Executing our strategy and driving improvements in operating performance Rebranding of U.S. locations is nearly 90% complete Successfully diversifying fleet mix to higher dollar utilization equipment categories Achieving above market growth in major urban locations
Slide 15: Financial Overview
Financial Overview 15
Slide 16: Q1 Financial Summary
Q1 Financial Summary 16NYSE: HRI 1 For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on slide 24. $ in millions, except EPS Three Months Ended March 31, 2017 2016 Equipment Rental Revenues $ 320.6 $ 307.8 Total Revenues 389.4 365.6 Net Income (Loss) (39.2
Slide 17: Q1 Equipment Rental Revenues
Q1 Equipment Rental Revenues $ in millions • Overall equipment rental revenues increased 4.2% • Equipment rental revenue increased +8.5% in key markets, excluding currency • Key markets represented 85% of rental revenue − Traction of urban market strategy • Key markets increase attributable to: – St
Slide 18: Q1 Total Revenues
• Total revenues for the first quarter were $389 million compared with $366 million in 2016, an increase of 6.5% • Higher sales of revenue earning equipment was related to aggressive fleet management to achieve our strategic goals • New equipment sales were lower due to the focus on higher-margin re
Slide 19: Q1 Net Income Bridge
$ in millions • Interest expense reflects debt on a stand- alone basis and includes $5.8 million related to the cost of the redemption of 10% of the senior notes in the first quarter • All Other includes the impact of increases in SG&A and DOE as well as declines in oil and gas contribution • Fleet
Slide 20: Q1 Adjusted EBITDA Bridge
0 20 40 60 100 140 $ in millions Q1 Adjusted EBITDA Bridge Q1 Adjusted EBITDA1 • The improvement in the results of the sales of revenue earning equipment and key markets added positively to adjusted EBITDA in the quarter • Upstream oil and gas results were impacted by continued headwinds resulting i
Slide 21: Fleet Capital Expenditures
NYSE: HRI 21 1 Cash Flow Basis 2 Based on ARA guidelines. Fleet Capital Expenditures • Cash expenditures for revenue earning equipment were $56.2 million as we continued to make progress in shifting fleet into high dollar utilization categories • Cash proceeds from disposals was $44.7 million, resul
Slide 22: Debt and Liquidity
NYSE: HRI 22 Debt and Liquidity Debt Ample Liquidity $ in millions, as of 03/31/17 ABL Credit Facility $978.8 Senior Secured Second Priority Notes $549.0 $562.5 '17 '18 '19 '20 '21 '22 '23 '24 • Stable debt with long dated maturities provide financial flexibility Total long-term debt of $2.2 billi
Slide 23: Q1 Key Takeaways
NYSE: HRI 23 Our strategy is driving strong top- line growth We are making investments to transform the business We are investing in the activities to support a stand- alone public company We are affirming our 2017 guidance and are on track with our five-year business transformation We remain confid
Slide 24: Appendix
NYSE: HRI 24 Appendix 24
Slide 25: Definitions of Operating Measures
25NYSE: 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 basis of refurbished assets r
Slide 26: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
26NYSE: 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 companies do not use iden
Slide 27: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
27NYSE: HRI Reconciliation of Net Income to EBITDA and Adjusted EBITDA $ in millions Three months ended March 31, 2017 2016 Net income (loss) $ (39.2) $ (1.5) Provision for income taxes (15.1) - Interest expense, net 37.8 6.5 Depreciation of revenue earning equipment 92.9 81.8 Non-rental depreciatio
Slide 28: Reconciliation of Free Cash Flow
28NYSE: 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 calculations, our definition and p
Slide 29: Reconciliation of Free Cash Flow
29NYSE: HRI Reconciliation of Free Cash Flow $ in millions Three Months Ended March 31, 2017 2016 Net cash provided by operating activities $ 86.2 $102.6 Revenue earning equipment expenditures ( (56.2) (36.7) Proceeds from disposal of revenue earning equipment 44.7 41.7 Property and equipment expend
Slide 30: Normalized Selling, General and Administrative Expenses
30NYSE: HRI Normalized Selling, General and Administrative Expenses $ in millions Three Months Ended March 31, 2017 Selling, general and administrative expenses $ 81.2 Less: Year-end reporting expenses (4.0) Customer bankruptcy (2.3) Normalized selling, general and administrative expenses $ 74.9 Nor
Slide 31: Diversifying the Fleet to Maximize Dollar Utilization
Diversifying the Fleet to Maximize Dollar Utilization 31NYSE: HRI Aerial - Booms 19.3% Aerial - Scissors & Other 6.4% Earthmoving - Heavy 10.7% Earthmoving - Compact 7.5%Material Handling- Telehandlers 13.5% Material Handling - Industrial 3.2% Trucks and Trailers 12.9% ProSolutions 13.4% ProContract
Slide 32: Herc Rentals
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