Herc Holdings Inc. · NYSE:HRI

Herc — Baird Global Industrial Conference 2021

52 slides from Herc's conference presentation, Nov 9, 2021

Slide 2: Herc Rentals Team Contents
Herc Rentals Team Contents Page Safe Harbor Statements and 3 Non-GAAP Financial Measures Who We Are 4 Strategic Overview 11 Third Quarter Results 33 Appendix 42 Larry Silber Mark Irion Elizabeth Higashi President & Chief Senior Vice President & Vice President, Executive Officer Chief Financial Offic
Slide 3: Safe Harbor Statements and Non-GAAP Financial Measures
Safe Harbor Statements and Non-GAAP Financial Measures Forward-Looking Statements Information Regarding Non-GAAP Financial Measures This presentation includes forward-looking statements as that term is defined by the federal In addition to results calculated according to accounting principles genera
Slide 5: More than 56 Years Serving Customers
More than 56 Years Serving Customers Our outstanding legacy is a strong foundation for the next chapter of our journey Growth / Industry Consolidation Implementing the Strategy Acquired Launched Introduced Specialty industry-first Completed Divested industry-first AA Rentals Larry Silber Entered Gro
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 Our Team Our Customers Our Communities Our Investors Experienced leadership Highly focused customer service Supporting our communities in Strong balance sheet model times of need Culture focused on integrity, Business mo
Slide 7: Herc Rentals Today
Herc Rentals Today 56 Years serving customers 2,000 Equipment categories (1) 295 Locations in 39 states and five Canadian provinces 5,100 Employees serving North America $52 billion addressable market (1) Approximate location count as of September 30, 2021 NYSE: HRI 7 ©2021 Herc Rentals Inc. All Rig
Slide 8: Core Fleet
Core Fleet Aerial Material Handling Earthmoving Equipment Other Boom lifts Carry-deck cranes Backhoes Air compressors Electric atrium lifts Electric forklifts Compact utility Solar light towers Electric scissor lifts Industrial forklifts Dozers Trucks and trailers Hybrid lifts Specialized lifting ge
Slide 9: Specialty Fleet
Specialty Fleet Climate Control & Remediation Power & Distribution Pump Entertainment Services & Other Air quality control Electric air compressors Centrifugal pumps Aerial and lifting equipment Chillers and heaters Portable generators Self-priming pumps Carts Dehumidification Portable load banks St
Slide 10: Our Strategy is Delivering Results
Our Strategy is Delivering Results Equipment Rental Revenue $ Utilization1 $ in millions Adjusted EBITDA Margin2 Net Leverage3 1. For a definition see slide 44 NYSE: HRI 10 2. For a definition and reconciliation to the most comparable GAAP financial measure, see slides 46 and 47 and previously filed
Slide 12: Shifting Into High Gear
Shifting Into High Gear Grow the Expand Elevate Integrate Allocate Core Specialty Technology ESG Capital Increasing fleet and Accelerating secular Ongoing investment in New sustainability Ability to retain low locations in urban shift from ownership to technology to improve goals for 2030 versus lev
Slide 13: Invest in More Fleet on Existing Locations
Invest in More Fleet on Existing Locations $ in millions • Core network of ~260 locations that has been purpose-built over the last 50 years • Capacity to add $1.0 billion of core fleet growth over the next three years to existing locations • Operating leverage maximized by adding fleet to existing
Slide 14: Leverage Scale of Large Urban Markets
Leverage Scale of Large Urban Markets Diverse end markets and broad customer base Diverse fleet provides a range of solutions for a variety of customers Greenfields and M&A build branch density and create logistics efficiencies ◦ Aviation ◦ Infrastructure ◦ Warehouses/Distribution ◦ Contractors ◦ Ut
Slide 15: Expand with Greenfields
Expand with Greenfields Targeted greenfield expansion strategy • Optimizing footprint in existing urban markets • Leveraging existing infrastructure to accelerate maturity of new locations • Develop specialty on existing real estate and expand to standalone facilities when ready for next growth phas
Slide 16: Adding Density to Large, Urban Markets Enhances Scale and Profitability
Adding Density to Large, Urban Markets Enhances Scale and Profitability (1) EBITDA margins exclude corporate overhead NYSE: HRI 16 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 17: Continue Investment in Specialty
Continue Investment in Specialty $ in millions Average Specialty Fleet at OEC $1,500 • Specialty equipment typically averages 14% to 16% higher $ utilization than core equipment • Growing specialty branch network enables rapid $1,000 response to meet customer demand • For urgent response, resources
Slide 18: Expanding Addressable Market and Continuing Shift from Ownership to Rental
Expanding Addressable Market and Continuing Shift from Ownership to Rental Expected increase in market size through rental penetration Current 2024 Target Current Rental Future Market Market Market Penetration1 Rental Share Share Penetration Climate 7% 15% <10% 20-30% Pump 2% 5% 25% 35-45% Power 10%
Slide 20: Take Advantage of Cross Selling Opportunities to Increase Wallet Share
Take Advantage of Cross Selling Opportunities to Increase Wallet Share 83% of revenue comes from $34 spent in our specialty lines for customers that rent from core every $100 in our core and specialty, contractor tools business 51% of revenue comes from Collaboration Sales structure set up to levera
Slide 21: Accelerating Specialty Growth Through 2024
Accelerating Specialty Growth Through 2024 Market Forces Herc Rentals Opportunity Target $ Utilization Accelerating 25% Increase Specialty secular trend to 25% - 30% in specialty rental Expanding + 30% of total OEC Increase = addressable share of market Higher $ customer wallet 50% - 60% Utilization
Slide 22: Technology Investments Enhance Customer and Employee Experience
Technology Investments Enhance Customer and Employee Experience Technology Enabled People & Culture Digitally Enabled Every touch point along the rental consumption Account Management chain is an opportunity to provide easy, effective, and efficient customer service Our goal is to execute all of the
Slide 23: Continual Investments in the Technology Platform to Enhance the Customer Experience
Continual Investments in the Technology Platform to Enhance the Customer Experience NYSE: HRI 23 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 24: Integrating ESG: Focusing on Team Herc
Integrating ESG: Focusing on Team Herc Competitive salaries and benefits enhance retention and attract talent Integrating new Team Herc members from recent acquisitions - focusing on Herc career development, internal job opportunities and training programs Supporting Herc families impacted by Hurric
Slide 25: Organic Growth
Organic Growth Total Average Fleet at OEC Organic Rental Revenue $ in millions $ in millions $5,600 $3,000 $2,500 $4,200 $2,000 $2,800 $1,500 $1,000 $1,400 $500 $0 $0 2020 2021E 2024E 2020 2021E 2024E $ in millions Organic Adjusted EBITDA Organic Net Leverage 3.0 $1,600 Target Net Leverage: 2.0x to
Slide 26: Growth in Fleet and Revenue Increases ROIC
Growth in Fleet and Revenue Increases ROIC ROIC1 20% 18% • Improving $ utilization and fleet 16% returns, as well as focus on 12% operating leverage and margin 12% improvement, are accelerating 8% 8% ROIC and support shareholder 8% 7% returns 4% 4% 4% • Investment in fleet early in the cycle and foc
Slide 27: A New Capital Allocation Plan
A New Capital Allocation Plan We are committed to delivering long-term sustainable value for shareholders with a balanced, disciplined and opportunistic approach to capital deployment Invest for Strategic M&A Dividend Surplus Capital Organic Growth Committed to organic Pursue strategic Initiate divi
Slide 28: Expanding through M&A
Expanding through M&A • Improve $ utilization through increased density and cross selling Herc Rentals Acquisitions Through 9/30/21 • Acquiring talented workforce and local customer relationships – Cumulative Value quicker than greenfields • Estimated opportunity for $500+ million of M&A per year Av
Slide 29: How Do We Invest Surplus Capital?
How Do We Invest Surplus Capital? For illustrative purposes only, assume: Maintaining leverage at the lower end of our target Invest $1.5B in M&A range of 2.0x to 3.0x, we generate surplus capital of If you assume: $2.0 to $3.0 billion to be deployed in accordance with our capital allocation plan. •
Slide 30: Shifting Into High Gear
Shifting Into High Gear $ in millions We have clear momentum in our results and have raised 2021 guidance three times this year to our current range of $870 to $890 million $1,150 Our 2021-2024 CAGR growth goal is 17% - 20% Adjusted EBITDA margin improved from 38.7% $890 in FY 2020 to 41.4% in the L
Slide 31: Near Term Guidance
Near Term Guidance • 2021 guidance on track – midpoint of adjusted EBITDA growth up 28% compared with 2020 • Issued 2022 guidance – further increase to adjusted EBITDA of 25% from midpoint of growth over 2021 2021 2022 Metric Current Growth Currrent Growth from prior year1 from prior year1 Adjusted
Slide 32: Shifting Into High Gear - Growth Goals Through 2024
Shifting Into High Gear - Growth Goals Through 2024 Metric 2016 - 2020 2021 - 20241 Rental Revenue CAGR 3.4% 12% to 15% Adjusted EBITDA CAGR 6.5% 17% to 20% Adj. EBITDA Margin Range 33% to 41% 45% to 50% Flow-Through 68% 60% to 70% Net Fleet Capital Expenditures $1.8 billion $2.5 to $3.0 billion Imp
Slide 34: Third Quarter Financial Highlights: Record Performance
Third Quarter Financial Highlights: Record Performance $ in millions $ in millions $ in millions + 29.2% +20.5% +25.0% $ in millions +81.2% +75.6% +160 bps NYSE: HRI 34 1. For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on Slide 42 ©2021 Herc Rentals In
Slide 35: Driving Solid Operational Performance
Driving Solid Operational Performance Q3 equipment rental revenue increased nearly 30% to $520 million over 2020 and 13% over 2019 Business activity is solid and all of our end markets are showing positive momentum Growth in core equipment rental revenue was enhanced by our specialty business Integr
Slide 36: Diversifying Fleet to Enhance Utilization
Diversifying Fleet to Enhance Utilization Fleet Composition at OEC1 Fleet Expenditures at OEC1 $ in millions $4.1 billion at OEC Fleet Disposals at OEC1 $ in millions Fleet disposals at OEC in Q3 2021 were $44 million, generating ~42% proceeds as a percent of OEC Q3 2021 $ Utilization increased to 4
Slide 37: Business Model Driving Growth
Business Model Driving Growth Q3 Revenue by Customer1 Our diverse customer mix, our base of national customers and expanded specialty business continue to provide growth opportunities Continuing investment in specialty businesses Expanding in fast-growing urban markets to drive top-line growth Q3 Lo
Slide 38: Pricing and Utilization Performance
Pricing and Utilization Performance Pricing1 Average Fleet at OEC1 $ Utilization2 Average Fleet on Rent at OEC1 0.0% 1. YoY Change. Based on ARA guidelines. NYSE: HRI 38 2. Based on ARA guidelines ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 39: Disciplined Capital Management
Disciplined Capital Management No near-term maturities and ample liquidity of Maturities $1.4 billion provides financial flexibility $ in millions Senior Unsecured Free cash flow3 of approximately $115 million for YTD Notes 2021 Net debt of $1.8 billion as of September 30, 2021, was $52.6 Finance Le
Slide 40: A New Cycle in the Making
A New Cycle in the Making N.A. Equipment Rental Market1 Select Market Forecasts2 U.S. Nonresidental Building Starts Actual Forecast 2020 2021 2022 2023 2024 YOY Growth (20)% +3% +8% +10% +5% Sectors with Tailwinds Actual Forecast 2020 2021 2022 2023 2024 Healthcare (5)% +7% +8% +14% +7% Architecture
Slide 41: Vision, Mission and Values
Vision, Mission and Values We are a customer-centric organization focused on safety, efficiency and profitable growth NYSE: HRI 41 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 43: Q3 & Nine Months 2021 Results
Q3 & Nine Months 2021 Results Three Months Ended September 30, Nine Months Ended September 30, 2021 vs 2020 2021 vs 2019 2021 vs 2020 2021 vs 2019 2021 2020 2019 2021 2020 2019 $ in millions, except per share data % Change % Change % Change % Change Equipment Rental Revenue $519.6 $402.3 $459.6 29.2
Slide 44: Glossary of Terms Commonly Used in the Industry
Glossary of Terms Commonly Used in the Industry OEC: Original Equipment Cost which is an operating measure based on the guidelines of the American Rental Association (ARA), which is calculated as the cost of the asset at the time it was first purchased plus additional capitalized refurbishment costs
Slide 45: Reconciliation of Net Income and Adjusted Earnings Per Diluted Share
Reconciliation of Net Income and Adjusted Earnings Per Diluted Share Adjusted Net Income and Adjusted Earnings Per Diluted Share - Adjusted Net Income represents the sum of net income (loss), restructuring and restructuring related charges, spin-off costs, loss on extinguishment of debt, impairment
Slide 46: Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA
Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through EBITDA, Adjusted EBITDA, and REBITDA - EBITDA represents the sum of net income (loss), provision (benefit) for income taxes, interest expense, net, depreciation of rental
Slide 47: Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA
Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through $ in millions Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $72.3 $39.9 $152.3 $38.2 Income tax provision 23.8 11.7 46.7
Slide 48: REBITDA Margin Trend
REBITDA Margin Trend $ in millions Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2021 Q2 2021 Q3 2021 Total Revenues $436.2 $368.0 $456.7 $520.4 $1,781.3 $453.8 $490.9 $550.4 Less: Sales of rental equipment 40.0 31.4 45.3 81.8 198.5 44.2 30.3 16.6 Less: Sales of new equipment, parts and supplies 7.0 7.
Slide 49: Calculation of Net Leverage Ratio
Calculation of Net Leverage Ratio Net Leverage Ratio –The Company has defined its net leverage ratio as net debt, as calculated below, divided by adjusted EBITDA for the trailing twelve-month period. This measure should be considered supplemental to and not a substitute for financial information pre
Slide 50: Reconciliation of Free Cash Flow
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 presentation
Slide 51: Historical Fleet at OEC
Historical Fleet at OEC1 $ in millions FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Q1 2021 Q2 2021 Q3 2021 Beginning Balance $3,384 $3,556 $3,651 $3,777 $3,822 $3,589 $3,626 $3,763 Expenditures $495 $524 $774 $627 $349 $117 $188 $210 Disposals ($328) ($442) ($607) ($593) ($551) ($111) ($71) ($44) Foreig
Slide 52: For additional information, please contact
For additional information, please contact: Elizabeth M. Higashi, CFA Vice President, Investor Relations & Sustainability elizabeth.higashi@hercrentals.com 239 301-1024 NYSE: HRI 52 ©2021 Herc Rentals Inc. All Rights Reserved.

Herc Holdings — Baird Global Industrial Conference 2021 on 6ix

Herc — Baird Global Industrial Conference 2021

Slide 1: Shifting Into High Gear

Slide 2: Herc Rentals Team Contents

Slide 3: Safe Harbor Statements and Non-GAAP Financial Measures

Slide 4: Introduction

Slide 5: More than 56 Years Serving Customers

Slide 6: We Aspire to be the Supplier, Employer and Investment of Choice in Our Industry

Slide 7: Herc Rentals Today

Slide 8: Core Fleet

Slide 9: Specialty Fleet

Slide 10: Our Strategy is Delivering Results

Slide 11: Strategic Overview

Slide 12: Shifting Into High Gear

Slide 13: Invest in More Fleet on Existing Locations

Slide 14: Leverage Scale of Large Urban Markets

Slide 15: Expand with Greenfields

Slide 16: Adding Density to Large, Urban Markets Enhances Scale and Profitability

Slide 17: Continue Investment in Specialty

Slide 18: Expanding Addressable Market and Continuing Shift from Ownership to Rental

Slide 19: Expand with Greenfields and M&A

Slide 20: Take Advantage of Cross Selling Opportunities to Increase Wallet Share

Slide 21: Accelerating Specialty Growth Through 2024

Slide 22: Technology Investments Enhance Customer and Employee Experience

Slide 23: Continual Investments in the Technology Platform to Enhance the Customer Experience

Slide 24: Integrating ESG: Focusing on Team Herc

Slide 25: Organic Growth

Slide 26: Growth in Fleet and Revenue Increases ROIC

Slide 27: A New Capital Allocation Plan

Slide 28: Expanding through M&A

Slide 29: How Do We Invest Surplus Capital?

Slide 30: Shifting Into High Gear

Slide 31: Near Term Guidance

Slide 32: Shifting Into High Gear - Growth Goals Through 2024

Slide 33: Third Quarter Results

Slide 34: Third Quarter Financial Highlights: Record Performance

Slide 35: Driving Solid Operational Performance

Slide 36: Diversifying Fleet to Enhance Utilization

Slide 37: Business Model Driving Growth

Slide 38: Pricing and Utilization Performance

Slide 39: Disciplined Capital Management

Slide 40: A New Cycle in the Making

Slide 41: Vision, Mission and Values

Slide 42: NYSE: HRI

Slide 43: Q3 & Nine Months 2021 Results

Slide 44: Glossary of Terms Commonly Used in the Industry

Slide 45: Reconciliation of Net Income and Adjusted Earnings Per Diluted Share

Slide 46: Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA

Slide 47: Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA

Slide 48: REBITDA Margin Trend

Slide 49: Calculation of Net Leverage Ratio

Slide 50: Reconciliation of Free Cash Flow

Slide 51: Historical Fleet at OEC

Slide 52: For additional information, please contact