Herc Holdings Inc. · NYSE:HRI
Herc — Q4 2016 Earnings Presentation
33 slides from Herc's earnings presentation, Mar 1, 2017
Slide 1: Q4 and Full Year 2016 Preliminary Results
Click to edit Master title style Click to edit Master subtitle style Herc Holdings Inc. Q4 and Full Year ending December 31, 2016 Preliminary Results March 1, 2017
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 Q4 and Full Year Preliminary Financial Review Barbara Brasier Senior Vice President and Chief Financial Officer Q&A Larry S
Slide 3: Safe Harbor Statements
Safe Harbor Statements Basis of Presentation The financial results discussed in this presentation are preliminary and unaudited and subject to change as the Company’s financial results are finalized. The financial information included in this presentation is based upon the condensed consolidated and
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 receive certain transition services from New Hertz pursuant to the transition services agreement covering IT services and other areas, which impact our control env
Slide 5: Safe Harbor Statements - Continued
Safe Harbor Statements - Continued 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 prices we ex
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 a
Slide 7: Transformation in Process
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 revenues faster than growth in
Slide 8: Preliminary Financial Highlights
Preliminary Financial Highlights 8 Q4 2016 FY 2016 Equipment Rental Revenues $356.7 million $1,352.7 million Equipment Rental Revenue Growth1 + 6.2% in Key Markets2; 84% of total + 1.3% YoY Overall2 + 8.1% in Key Markets2; 83% of total + 0.5% YoY Overall2 Pricing + 1.5% YoY in Key Markets
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 Increased sales force as part of territory optimization to drive revenue growth Continued to successfully diversify fleet to attract “square-footage-under-roof” customers Shifted to higher $ Utilization equipment showing results in major urban locations Increase
Slide 11: Diversifying the Fleet to Maximize Dollar Utilization
Diversifying the Fleet to Maximize Dollar Utilization 11NYSE: 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% ProContr
Slide 12: Improve Operating Efficiencies
Improve Operating Efficiencies Reduced FUR to 15.3% in December 2016 compared to 15.9% in the prior year Improved fleet, parts and service costs through vendor management Focused on enhancing salesforce effectiveness through by driving the right behaviors Continued to improve safety performa
Slide 13: Enhance Customer Experience
Enhance Customer Experience Expanded ProSolutions Centers of Excellence to approximately 30 locations Continued to upgrade branches to showcase ProContractor equipment Focused on maintenance and service initiatives to better serve customers Shifted core OEC categories to premium equipment th
Slide 14: 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 February 2017, excludes Party & Event data. 3 Dodge Analytics. 4 Industrial information resources. $38 $3
Slide 15: On the Path Forward: Disciplined Capital Management
On the Path Forward 15NYSE: HRI Disciplined Capital Management Expand and Diversify Revenues Improve Operating Efficiencies Enhance Customer Experience On the Path Forward • Broaden customer base • Expand products and services • Increase density • Grow ancillary revenues • Improve vendor management
Slide 16: Preliminary Financial Overview
Preliminary Financial Overview 16
Slide 17: Q4 and Full Year Preliminary Financial Summary
Q4 and Full Year Preliminary Financial Summary 17NYSE: HRI $ in millions, except EPS Three Months Ended December 31, Year Ended December 31, 2016 2015 2016 2015 Equipment Rental Revenues $ 356.7 $ 359.2 $ 1,352.7 $ 1,411.7 Total Revenues 405.2 422.4 1,554.8 1,678.2 Net Income (Loss) (14.0) 78.2 (20.
Slide 18: Q4 and Full Year Preliminary Equipment Rental Revenues
Q4 and Full Year Preliminary Equipment Rental Revenues 18 $ in millions Equipment rental revenue increased +6.2% in key markets, excluding divestitures and currency Key markets represented 84% of rental revenue • Key markets increase attributable to: - Traction of urban market strategy - ProSolu
Slide 19: Q4 and Full Year Preliminary Total Revenues
19NYSE: HRI 2015 included revenue from divested foreign operations Sales of revenue earning equipment declined YoY due to high volume of disposals from oil & gas regions in 2015 New equipment sales were also lower due to focus on higher-margin rental activities Q4 Total Revenue Bridge Full Yea
Slide 20: Q4 and Full Year Preliminary Net Income
20NYSE: HRI $ in millions 2015 included Q4 gain on divestiture Interest expense for second half 2016 reflects debt on a stand-alone basis Fleet depreciation increased due to fleet growth and normal course rate review Losses on sales of revenue earning equipment diminished in second half In
Slide 21: Q4 and Full Year Preliminary Adjusted EBITDA
21NYSE: HRI $ in millions Q4 Adjusted EBITDA Bridge 2 Full Year Adjusted EBITDA Bridge 2 Q4 Summary Q4 and Full Year Preliminary Adjusted EBITDA1 Key markets mostly offset oil and gas decline Full Year Summary $536.2$18.4 $31.1 $9.7 $50.7 $45.5 $600.6 200 250 300 350 400 450 500 550 600 650 2015 F
Slide 22: Preliminary Fleet Capital Expenditures
Preliminary Fleet Capital Expenditures 22 Average fleet original equipment cost (OEC). NYSE: HRI Net Fleet Capex for the full year 2016 was $352.9 million as we successfully disposed of low performing fleet sooner than anticipated while achieving fleet diversification targets In 2016, received $
Slide 23: Preliminary Debt and Liquidity
Preliminary Debt and Liquidity 23 Debt Ample Liquidity $ in millions, as of 12/31/16 $910.0 $610.0 $625.0 '17 '18 '19 '20 '21 '22 '23 '24 Total Liquidity $ 828.7 Cash and Cash Equivalents 11.6 ABL Availability 817.1 Facility 1,750.0 Outstanding (910.0) Letters of Credit (22.9) ABL Credit Facility Se
Slide 24: Full Year 2017 Guidance
Full Year 2017 Guidance1 24NYSE: HRI Adjusted EBITDA $550 million to $590 million Net Fleet Capital Expenditures2 $275 million to $325 million 1 Herc Holdings does not provide forward-looking guidance for certain financial measures on a GAAP basis or a reconciliation of forward-looking non-GAAP fina
Slide 25: In Summary
In Summary • Gained traction in introducing new products across branch network • Accelerated branch performance in urban markets • Improved operating efficiencies • Improved sales force effectiveness through training and productivity tools • Achieved growth in ancillary revenues • Continued to drive
Slide 26: Appendix
Appendix 26
Slide 27: Glossary of Terms Commonly Used in the Industry
Glossary of Terms Commonly Used in the Industry 27NYSE: HRI 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
Slide 28: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA 28NYSE: 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 29: Preliminary Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Preliminary Reconciliation of Net Income to EBITDA and Adjusted EBITDA 29 $ in millions Three months ended December 31, Year Ended December 31, 2016 2015 2016 2015 Net income (loss) $ (14.0) $ 78.2 $ (20.5) $ 111.3 Provision for income taxes 6.6 16.9 15.6 45.6 Interest expense, net 32.1 5.1 84.2 32.
Slide 30: Adjusted Revenue Reconciliation
30 Year Ended December 31, 2016 Actual Sale of France and Spain Foreign Currency Translation Year Ended December 31, 2016 Adjusted Total revenues $ 1,554.8 $ 0 $ 8.1 $1,562.9 Equipment rental revenue 1,352.7 0 6.6 1,359.3 Year Ended December 31, 2015 Actual Sale of France and Spain Foreign Currency
Slide 31: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow 31NYSE: HRI 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 32: Preliminary Reconciliation of Free Cash Flow
Preliminary Reconciliation of Free Cash Flow 32 $ in millions Year Ended December 31, 2016 Net cash provided by operating activities $ 449.7 Revenue earning equipment expenditures ( (468.3) Proceeds from disposal of revenue earning equipment 115.4 Non-rental capital expenditures (47.8) Proceeds from
Slide 33: Herc Rentals
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