Herc Holdings Inc. · NYSE:HRI
Herc — Q2 2024 Earnings Presentation
34 slides from Herc's earnings presentation, Jul 23, 2024
Slide 1: Scaling for Sustainable Growth
Scaling for Sustainable Growth Q2 2024 EARNINGS CONFERENCE CALL July 23, 2024
Slide 2: Herc Rentals Team and Agenda
Herc Rentals Team and Agenda Agenda Safe Harbor Q2 2024 Overview Q2 Operations Review Q2 Financial Review 2024 Outlook Larry Silber Aaron Birnbaum Mark Humphrey Leslie Hunziker President & Chief Senior Vice President Senior Vice President Senior Vice President Q&A Executive Officer & Chief Operating
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 In addition to results calculated according to accounting principles generally by the fede
Slide 4: Second Quarter 2024: Delivering on Growth Strategies
Second Quarter 2024: Delivering on Growth Strategies Optimize branch network for fleet / operating efficiencies at scale Strategies to Accelerate • Completed 2 acquisitions—10 locations; opened 7 greenfield locations ROIC and Increase Enhance fleet mix Shareholder Returns: • Expanded OEC specialty f
Slide 5: First Half 2024: Financial Performance
First Half 2024: Financial Performance Equipment Rental Revenue Total Revenues Adjusted EBITDA¹ $ in millions $ in millions $ in millions $1,652 $1,484 $1,542 $1,356 7% $699 $660 9% $1,208 $1,132 6% $521 $848 $944 $715 $391 $804 $297 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2
Slide 6: Second Half 2024 Outlook
Second Half 2024 Outlook Full Year 2024 guidance reaffirmed, results expected to be back-half weighted Revenue • Historically local/national demand accelerates into peak season through October ◦ Now expect same-store local-market growth for FY:24 to be low-single digit, down from previous forecast o
Slide 7: Operations Review
Operations Review Aaron Birnbaum Senior Vice President and Chief Operating Officer Herc Holdings Inc. NYSE: HRI Q2 2024 7
Slide 8: Focusing on Safety
Focusing on Safety Q2 2024: Continuing focus on Perfect Days • All branches reported > 97% Perfect Days • Perfect Days are those with no: • OSHA reportable incidents • At-fault moving vehicle accidents • DOT violations Total Recordable Incident Rate is 0.72 — favorable to industry standard of 1.0 Pr
Slide 9: Scaling for Sustainable Growth: Expanding Through Acquisitions and Greenfields
Scaling for Sustainable Growth Expanding Through Acquisitions and Greenfields Adding locations increases density and share in urban markets • 428 locations at June 30, 2024, +15% YoY Targeting Top 100 metropolitan markets • Q2: 2 acquisitions - 10 locations; 7 greenfield locations • YTD: 6 acquisiti
Slide 10: Optimizing Fleet Mix and Lifecycle Performance
Optimizing Fleet Mix and Lifecycle Performance Fleet Expenditures at OEC1 $6.7 billion at OEC1,2 $ in millions 2023 2024 Specialty $400 Other $348 $344 $274 22% 23% $196 $167 Fleet Q1 Q2 Q3 Q4 Composition Fleet Disposals at OEC1 Material 19% $ in millions Handling 25% 2023 2024 Aerial 11% $309 $186
Slide 11: Delivering Growth and Resiliency through Diversification
Delivering Growth and Resiliency through Diversification Contractors 35% 27% Q2 Revenue Industrial Q2 Local vs. 44% National by Customer1 Local National Mix 56% 9% Other 13% 16% Commercial Facilities Infrastructure & Government • Local account revenue increased due to acquisitions and greenfields, a
Slide 12: Capitalizing on Growth Trends Across Diverse Customer and Project Base
Capitalizing on Growth Trends Across Diverse Customer and Project Base Infrastructure Commercial Contractors (35%) Industrial (27%) Other (9%) & Gov. Direct (16%) Facilities (13%) • Electrical • Agriculture • Aerospace • Airports • Banks • Sporting Events • General Contractors • Chemical Processing
Slide 13: Financial Review
Financial Review Mark Humphrey Senior Vice President and Chief Financial Officer
Slide 14: Q2 2024 Financial Results
Q2 2024 Financial Results Three Months Ended June 30, Six Months Ended June 30, 2024 vs 2023 2024 vs 2023 2024 2023 2024 2023 $ in millions, except per share data % Change % Change Equipment Rental Revenue $765 $702 9.0% $1,484 $1,356 9.4% Total Revenues $848 $802 5.7% $1,652 $1,542 7.1% Net Income
Slide 15: Q2 2024 Financial Results Excluding Cinelease Studio Entertainment
Q2 2024 Financial Results Excluding Cinelease Studio Entertainment1 Three Months Ended June 30, Six Months Ended June 30, 2024 vs 2023 2024 vs 2023 2024 2023 2024 2023 $ in millions % Change % Change Core Equipment Rental Revenue $739 $686 7.7% $1,429 $1,321 8.2% Core Total Revenues $819 $784 4.5% $
Slide 16: Q2 24 YoY Results Bridge Excluding Cinelease Studio Entertainment
Q2 24 YoY Results Bridge Excluding Cinelease Studio Entertainment1 Equipment Rental Revenue Adjusted EBITDA $739 $352 $352 $686 2023 Equipment Gain on DOE SG&A Other 2024 2023 Pricing OEC on Rent Mix Ancillary 2024 Rental Sale of Revenue Rental Equipment Adjusted EBITDA Margin drivers: • New acquisi
Slide 17: Disciplined Capital Management
Disciplined Capital Management Maturities • No near-term maturities and ample liquidity2 of $2.1 As of June 30, 2024 billion provide financial flexibility $ in millions • Issued $800 million aggregate principal amount of 6.625% senior unsecured notes on June 7; proceeds ABL Credit ABL Credit used to
Slide 18: Continued Strength in Key End Markets
Continued Strength in Key End Markets N.A. Equipment Rental Market1 Industrial Spending2 $ in billions $ in billions $368 $372 $372 $367 $365 $92 $96 $85 $89 $77 $69 $328 $56 $60 $61 $317 — — — — — — — — — — — — — — — — — — $315 $52 $55 $310 $309 $298 17 18 19 20 21 22 23 24E 25E 26E 27E 17 18 19 20
Slide 19: Reaffirming 2024 Guidance Excluding Cinelease
Reaffirming 2024 Guidance Excluding Cinelease Metric 2023 Excluding Cinelease 2024 Full Year Guidance Equipment Rental Revenue $2,820 million +7% to 10% Adjusted EBITDA $1,462 million $1.55 billion to $1.60 billion $500 to $700 million after gross Net Rental Equipment Expenditures after Gross Capex
Slide 20: Purpose, Vision, Mission and Values
Purpose, Vision, Mission and Values We equip our customers and communities to build a brighter future Herc Holdings Inc. NYSE: HRI Q2 2024 20
Slide 21: Appendix
Appendix oe a aw .
Slide 22: Glossary of Terms Commonly Use in the Industry
Glossary of Terms Commonly Use 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 23: Cinelease Studio Entertainment Assets Held for Sale
Cinelease Studio Entertainment Assets Held for Sale Cinelease is Herc's studio management and lighting and grip business • Market preference for lighting and grip equipment to be part of studio ownership • Owning studio real estate does not align with Herc strategy • Lighting and grip equipment repr
Slide 24: 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, provision (benefit) for income taxes, interest expense, net, depreciation of rental equipmen
Slide 25: 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 Three Months Ended June 30, Six Months Ended June 30, $ in millions 2024 2023 2024 2023 Net income $70 $76 $135 $143 Income tax provision 23 27 39 35 Interest expense, ne
Slide 26: Reconciliation Excluding Studio Entertainment, Three Months Ended June 30
Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through, Excluding Studio Entertainment Three Months Ended June 30, 2024 2023 $ in millions Herc Studio Entertainment Herc, excl Studio Herc Studio Entertainment Herc, excl Studi
Slide 27: Reconciliation Excluding Studio Entertainment, Six Months Ended June 30
Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through, Excluding Studio Entertainment Six Months Ended June 30, 2024 2023 $ in millions Herc Studio Entertainment Herc, excl Studio Herc Studio Entertainment Herc, excl Studio
Slide 28: REBITDA Margin and Flow-Through Quarterly Trend
REBITDA Margin and Flow-Through Quarterly Trend $ in millions Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 Net income $67 $76 $113 $91 $347 $65 $70 Income tax provision 8 27 33 32 100 16 23 Interest expense, net 48 54 60 62 224 61 63 Depreciation of rental equipment 152 161 167 163 643 16
Slide 29: REBITDA Margin and Flow-Through Annual Trend
REBITDA Margin and Flow-Through Annual Trend $ in millions 2019 2020 2021 2022 2023 Net income $47 $74 $224 $330 $347 Income tax provision 16 20 67 104 100 Interest expense, net 174 93 86 122 224 Depreciation of rental equipment 410 403 420 536 643 Non-rental depreciation and amortization 62 63 68 9
Slide 30: 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, transaction related costs, restructuring and restructuring related charges, spin-off costs, loss on extinguishment
Slide 31: 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 pr
Slide 32: 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 33: Historical Fleet at OEC
Historical Fleet at OEC1 $ in millions FY 2019 FY 2020 FY 2021 FY 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 Beginning Balance $3,777 $3,822 $3,589 $4,381 $5,637 $5,915 $6,211 $6,217 $5,637 $6,328 $6,416 Expenditures 627 348 725 1,218 348 400 274 196 1,218 167 344 Disposals (593) (
Slide 34: For additional information, please contact
For additional information, please contact: Leslie Hunziker SVP Investor Relations, Communications & Sustainability leslie.hunziker@hercrentals.com 239-301-1675 Herc Holdings Inc. NYSE: HRI Q2 2024 34