Herc Holdings Inc. · NYSE:HRI

Herc — Jefferies 2017 Industrials Conference

47 slides from Herc's conference presentation, Aug 9, 2017

Slide 1: Herc Holdings Inc. Jefferies 2017 Industrials Conference
© 2017 Herc Rentals Inc. Click to edit Master title style Click to edit Master subtitle style Herc Holdings Inc. Jefferies 2017 Industrials Conference New York City August 9, 2017
Slide 2: Management Participants
© 2017 Herc Rentals Inc. Management Participants Larry Silber President and Chief Executive Officer Barbara Brasier Senior Vice President and Chief Financial Officer 2 Elizabeth Higashi Vice President, Investor Relations NYSE: HRI
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: Reinvigorated Organization With a Customer-Centric Culture
© 2017 Herc Rentals Inc. Reinvigorated Organization With a Customer-Centric Culture and Increased Focus on Operating Efficiency and Safety Our Vision To ensure that end users of our equipment and services achieve optimal performance safely, efficiently and effectively. Our Mission Our Values We do w
Slide 9: Highly Experienced Leadership Team
© 2017 Herc Rentals Inc. Carlo Cavecchi Paul Dickard Elizabeth Higashi Mark Humphrey Charles Miller Jason Oosterbeek VP, ProSolutions VP, Communications VP, Investor Relations VP, Controller and Chief Accounting Officer VP, Operations VP, Pricing & Sales Strategy 30+ years 25 years 30+ years 20+ yea
Slide 10: Company Overview
© 2017 Herc Rentals Inc. ProSolutions and ProContractor 20% Core 80% Company Overview 10 Construction 36% Other Customers 42% Industrial 22%  One of the leading North American equipment rental companies  Approximately 275 locations globally  3% market share in a highly fragmented market  $3.65 b
Slide 11: Market Leader with Significant Scale and Broad Footprint
© 2017 Herc Rentals Inc. Market Leader with Significant Scale and Broad Footprint 11 Approximately 275 company locations, principally in North America NYSE: HRI Industry Rental Growth 5-Year CAGR
Slide 12: Expand and Diversify Revenues: Broaden the Customer Base
© 2017 Herc Rentals Inc. Expand and Diversify Revenues: Broaden the Customer Base 12 • Building Services • Convention and Trade Shows • Repair Services • Flooring Contractors • Facilities Support Services • Carpentry Contractors • Personal and Household Goods Repair and Maintenance • Finish Carpentr
Slide 13: Expand Products and Services with ProSolutions
© 2017 Herc Rentals Inc. Expand and Diversify Revenues: Expand Products and Services with ProSolutionsTM 13 PUMPPOWER INDUSTRIAL TOOLS AIR CONDITIONERS PORTABLES DEHUMIDIFICATIONCHILLERS HEAT NYSE: HRI
Slide 14: Increase Density in High Growth Urban Markets
© 2017 Herc Rentals Inc. Industry Rental Growth 5-Year CAGR Expand and Diversify Revenues: Increase Density in High Growth Urban Markets and Focus on Higher Margin Equipment 1 Industry data and estimates for rates and time utilization OEC $136,000 Monthly Rate $4,200 Time Utilization 75.0% Estimated
Slide 15: Expand and Diversify Revenues: Driving $ Utilization
© 2017 Herc Rentals Inc. Expand and Diversify Revenues: Driving $ Utilization 15NYSE: 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
Slide 16: Improve Vendor Management and Fleet Availability
© 2017 Herc Rentals Inc. Q2 2015 Q1 20164 2016 Improve Operating Efficiencies: Improve Vendor Management and Fleet Availability Driving operational gains through buying efficiency and increased availability Consolidate Brands and OEMs Increase Fleet Available to Rent 40% # of Suppliers Lower vendor
Slide 17: Enhance Customer Experience: Become the Supplier of Choice
© 2017 Herc Rentals Inc. Enhance Customer Experience: Become the Supplier of Choice Best in class brands combined with a comprehensive suite of services help customers work more efficiently, effectively and safely Consultive solutions Subject-matter experts Delivering Premium Products Delivering Sol
Slide 18: 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 19: Disciplined Capital Management: Drive EBITDA Growth
© 2017 Herc Rentals Inc. Disciplined Capital Management: Drive EBITDA Growth Long term, Adjusted EBITDA is targeted to meet or exceed peer metrics with ROIC expected to exceed cost of capital Improvement Opportunity Initiatives underway Shift Equipment Portfolio Mix ✓ Adding ProSolutions and ProCont
Slide 20: Long-Tenured National Account Portfolio Provides Stable Base
© 2017 Herc Rentals Inc. Long-Tenured National Account Portfolio Provides Stable Base of Business National Accounts by Tenure (Years) Over 1,800 National Accounts • Dedicated national account managers • Stable revenue base • Longer transactions 78% of National Accounts revenue are from accounts open
Slide 21: Decisions that Support Our Strategic Direction
© 2017 Herc Rentals Inc. Decisions that Support Our Strategic Direction Disciplined Capital Management IT Infrastructure North American Operations 21NYSE: HRI Discontinued development of new IT systems initiated prior to spin- off; will build on our current industry standard systems Signed agreement
Slide 22: 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 23: 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 24: Expand and Diversify Revenues: Improving Fleet Mix
© 2017 Herc Rentals Inc. Expand and Diversify Revenues: Improving Fleet Mix 24NYSE: 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 25: 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 26: 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 27: 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 28: 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 29: 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 31: Q2 and First Half Financial Summary
© 2017 Herc Rentals Inc. Q2 and First Half Financial Summary 31NYSE: HRI 1 For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on slide 40. $ in millions, except EPS Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Equipment Rental
Slide 32: 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 33: 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 34: Q2 and First Half 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 35: 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 36: Fleet at Original Equipment Cost
© 2017 Herc Rentals Inc.NYSE: HRI 36 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 37: Debt and Liquidity
© 2017 Herc Rentals Inc.NYSE: HRI 37 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 38: 2017 Full Year Guidance
© 2017 Herc Rentals Inc. 2017 Full Year Guidance1 NYSE: HRI 38  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 39: Q2 Key Takeaways
© 2017 Herc Rentals Inc.NYSE: HRI 39 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 41: Definitions of Operating Measures
© 2017 Herc Rentals Inc. 41NYSE: 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 42: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
© 2017 Herc Rentals Inc. 42NYSE: 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 43: 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 44: Reconciliation of Free Cash Flow
© 2017 Herc Rentals Inc. 44NYSE: 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 45: Reconciliation of Free Cash Flow
© 2017 Herc Rentals Inc. 45NYSE: 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 46: Historic Fleet at Original Equipment Cost
© 2017 Herc Rentals Inc.NYSE: HRI 46 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 $

Herc Holdings — Jefferies 2017 Industrials Conference on 6ix

Herc — Jefferies 2017 Industrials Conference

Slide 1: Herc Holdings Inc. Jefferies 2017 Industrials Conference

Slide 2: Management Participants

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: Reinvigorated Organization With a Customer-Centric Culture

Slide 9: Highly Experienced Leadership Team

Slide 10: Company Overview

Slide 11: Market Leader with Significant Scale and Broad Footprint

Slide 12: Expand and Diversify Revenues: Broaden the Customer Base

Slide 13: Expand Products and Services with ProSolutions

Slide 14: Increase Density in High Growth Urban Markets

Slide 15: Expand and Diversify Revenues: Driving $ Utilization

Slide 16: Improve Vendor Management and Fleet Availability

Slide 17: Enhance Customer Experience: Become the Supplier of Choice

Slide 18: Strong Industry Outlook Supports Our Growth Proposition

Slide 19: Disciplined Capital Management: Drive EBITDA Growth

Slide 20: Long-Tenured National Account Portfolio Provides Stable Base

Slide 21: Decisions that Support Our Strategic Direction

Slide 22: Committed to Our Strategic Direction

Slide 23: Expand and Diversify Revenues: Strong Q2 Revenue Growth

Slide 24: Expand and Diversify Revenues: Improving Fleet Mix

Slide 25: Improve Operating Effectiveness: Improving Profitability

Slide 26: Improve Operating Effectiveness: Focus on Safety

Slide 27: Enhance Customer Experience: Q2 2017 Highlights

Slide 28: Enhance Customer Experience: Investing in Technology

Slide 29: Transformation in Process

Slide 30: Financial Overview

Slide 31: Q2 and First Half Financial Summary

Slide 32: Q2 and First Half Equipment Rental Revenues

Slide 33: Q2 and First Half Total Revenues

Slide 34: Q2 and First Half Net Loss Bridge

Slide 35: Q2 and First Half Adjusted EBITDA

Slide 36: Fleet at Original Equipment Cost

Slide 37: Debt and Liquidity

Slide 38: 2017 Full Year Guidance

Slide 39: Q2 Key Takeaways

Slide 40: Appendix

Slide 41: Definitions of Operating Measures

Slide 42: Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Slide 43: Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

Slide 44: Reconciliation of Free Cash Flow

Slide 45: Reconciliation of Free Cash Flow

Slide 46: Historic Fleet at Original Equipment Cost

Slide 47: 47NYSE: HRI