Herc Holdings Inc. · NYSE:HRI
Herc — FY2021 Earnings Presentation
34 slides from Herc's earnings presentation, Feb 10, 2022
Slide 1: Shifting Into High Gear
Shifting Into High Gear HERC HOLDINGS INC. Q4 and Full Year 2021 Earnings Conference Call February 10, 2022 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 2: Herc Rentals Team & Agenda
Herc Rentals Team & Agenda Larry Silber Mark Irion Agenda President & Chief Senior Vice President & Executive Officer Chief Financial Officer • Introductions • Safe Harbor • Overview • Operations Review Aaron Birnbaum Elizabeth Higashi Senior Vice President & Vice President, Chief Operating Officer
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 4: Q4 Key Takeaways – Shifting Into High Gear
Q4 Key Takeaways – Shifting Into High Gear Strong Q4 contributed to record FY 2021 results Outstanding performance by our operations and field support was enhanced by steady demand and a positive operating environment Increased Q4 dollar utilization YoY by 400 basis points to 44.6% Completed 12 acqu
Slide 5: Fourth Quarter Financial Highlights: Record Performance
Fourth Quarter Financial Highlights: Record Performance Rental Revenues Total Revenues Adjusted EBITDA¹ $ in millions $ in millions $578.0 $ in millions $542.4 $540.1 $520.4 $256.5 $457.0 $427.3 $214.4 $195.6 +27% +11% +31% 2019 2020 2021 2019 2020 2021 2019 2020 2021 Net Income Earnings Per Diluted
Slide 6: Herc Rentals Today
Herc Rentals Today 56 Years serving customers ~2,900 Equipment categories 312 Locations in 40 states and five Canadian provinces 1 5,600 Employees serving North America $57 billion addressable market 2 (1) Location count as of February 10, 2022 (2) ARA estimate of the 2022 North American addressable
Slide 7: 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 8: Our Strategy is Delivering Results
Our Strategy is Delivering Results Equipment Rental Revenue $ Utilization1 $ in millions $1,910 43% $1,702 39% $1,658 37% $1,544 36% 36% $1,499 34% $1,353 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 Adjusted EBITDA Margin1 Net Leverage2 4.1x 43% 3.6x 39% 3.1x 37% 2.8x 2.4x 34% 35% 2.
Slide 9: Operations Review
Operations Review Aaron Birnbaum Senior Vice President and Chief Operating Officer
Slide 10: Driving Solid Operational Performance
Driving Solid Operational Performance Q4 equipment rental revenue increased by 27% over 2020 and 19% over 2019 to a record $542 million Business activity is strong and all of our end markets are showing positive momentum Strong growth in rentals of core and specialty equipment Integration of acquisi
Slide 11: Diversifying Fleet to Enhance Utilization
Diversifying Fleet to Enhance Utilization Fleet Composition Fleet Expenditures at OEC1 $4.4 billion at OEC1 $ in millions 2019 2020 2021 $289 $188 $210 $210 Other 21.4% $172 $103 $109 $117 $88 $90 $63 $62 Material Q1 Q2 Q3 Q4 Handling 17.7% Fleet Disposals at OEC1 $ in millions 2019 2020 2021 Specia
Slide 12: Business Model Driving Growth
Business Model Driving Growth Q4 Revenue by Customer1 Diverse customer mix and expanding base of local Other 23% Contractors 32% customers continues to provide growth opportunities Continuing investment in both core and specialty fleet is Infrastructure also driving year-over-year growth and Governm
Slide 13: Expanding through M&A in 2021
Expanding through M&A in 2021 M&A Rationale and Benefits ◦ Revenue synergies through increased density and cross selling April 2021 April 2021 ◦ Acquiring talented workforce and local customer December 2020 relationships – quicker than greenfields ◦ Estimated opportunity for $500+ million of M&A per
Slide 14: Integrating ESG: Focusing on Team Herc
Integrating ESG: Focusing on Team Herc Environmental Total Recordable Incident Rate Introduced initiatives to begin reduction of Scope 1 and 2 GHG emissions intensity 1.35 1.11 1.05 0.99 0.98 Social 0.86 Improved employee survey participation, employee net promoter score and job satisfaction despite
Slide 15: Financial Review
Financial Review Mark Irion Senior Vice President and Chief Financial Officer
Slide 16: Q4 & Full Year 2021 Results
Q4 & Full Year 2021 Results Three Months Ended December 31, Year Ended December 31, 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 $542.4 $427.3 $457.0 26.9% 18.7% $1,
Slide 17: Pricing and Utilization Performance
Pricing and Utilization Performance Pricing1 Average Fleet at OEC1 2019 2020 2021 2019 2020 2021 14.9% 4.6% 4.5% 3.8% 3.5% 3.3% 2.8% 2.4% 4.3% 1.9% 2.0% 1.7% 0.4% 0.7% (1.3)% (0.5)% (1.9)% (0.3)% (0.3)% (5.1)% (4.5)% (0.8)% (0.8)% (6.0)% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $ Utilization2 Average Fleet on Rent a
Slide 18: Disciplined Capital Management
Disciplined Capital Management Maturities No near-term maturities and ample liquidity2 of $ in millions $1.3 billion provides financial flexibility Senior Unsecured Notes Free cash flow3 of approximately $214 million for FY 2021 Net debt of $1.9 billion as of December 31, 2021, was up by approximate
Slide 19: A New Cycle in the Making
A New Cycle in the Making N.A. Equipment Rental Market1 Select Market Forecasts2 ~5% GR: U.S. Nonresidental Building Starts E CA ’2 0-'25 $62 $64 Actual Forecast $60 $55 $57 $51 $52 $50 $52 2020 2021 2022 2023 2024 $47 $49 $41 $44 $38 $38 YOY Growth (19)% +12% +8% +6% +4% $35 $31 $32 Sectors with Ta
Slide 20: Shifting Into High Gear
Shifting Into High Gear 1, 2 Adjusted EBITDA and Margin $ in millions 0% -2 50.0% 7% We have clear momentum in our results :1 $1,500 o al G R CA G 47.5% We raised 2021 guidance three times and are 24 1 -' now raising our initial 2022 guidance '2 $1,250 $1,175 45.0% Our 2021-2024 CAGR growth goal is
Slide 21: Raising Guidance
Raising Guidance • Record 2021 results exceeded guidance of $870 to $890 million – Adjusted EBITDA grew to $895 million, up 30% compared with 2020 and 21% compared with 2019 • Raising 2022 adjusted EBITDA guidance range and affirming net fleet capital expenditures guidance range Metric 2021 Actual 2
Slide 22: 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 23: Purpose, Vision, Mission and Values
Purpose, Vision, Mission and Values We equip our customers and communities to build a brighter future NYSE: HRI 23 ©2022 Herc Rentals Inc. All Rights Reserved.
Slide 24: Appendix
NYSE: HRI 24 ©2022 Herc Rentals Inc. All Rights Reserved.
Slide 25: Full Year Financial Highlights: Record Performance
Full Year Financial Highlights: Record Performance Rental Revenues Total Revenues Adjusted EBITDA¹ $ in millions $1,910.4 $ in millions $ in millions $894.7 $2,073.1 $1,999.0 $1,701.8 +24% +16% $741.0 +30% $1,781.3 $1,543.7 $689.4 2019 2020 2021 2019 2020 2021 2019 2020 2021 Net Income Earnings Per
Slide 26: 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 27: 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 28: Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, REBITDA
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 29: Reconciliation of Net Income to Adj. EBITDA and Adj. EBITDA Margin, REBITDA
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 December 31, Year Ended December 31, 2021 2020 2019 2021 2020 2019 Net income $71.8 $35.5 $35.1 $224.1 $73.7 $47.5 Income tax provision 1
Slide 30: REBITDA Margin Trend
REBITDA Margin Trend $ in millions Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Total Revenues $436.2 $368.0 $456.7 $520.4 $1,781.3 $453.8 $490.9 $550.4 $578.0 $2,073.1 Less: Sales of rental equipment 40.0 31.4 45.3 81.8 198.5 44.2 30.3 16.6 22.0 113.1 Less: Sales
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 pre
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 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 $ in millions Beginning Balance $3,384 $3,556 $3,651 $3,777 $3,822 $3,589 $3,626 $3,763 $4,075 $3,589 Expenditures $495 $524 $774 $627 $349 $117 $188 $210 $210 $725 Disposals ($328) ($442) ($607)
Slide 34: 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 34 ©2022 Herc Rentals Inc. All Rights Reserved.