Herc Holdings Inc. · NYSE:HRI
Herc — Q3 2021 Earnings Presentation
32 slides from Herc's earnings presentation, Oct 21, 2021
Slide 1: Shifting Into High Gear
Shifting Into High Gear HERC HOLDINGS INC. Q3 and Nine Months 2021 Earnings Conference Call October 21, 2021 ©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: Third Quarter Financial Highlights: Record Performance
Third Quarter Financial Highlights: Record Performance Rental Revenues Total Revenues Adjusted EBITDA¹ $ in millions $ in millions $ in millions $550.4 $519.6 $508.1 $459.6 $456.7 $245.9 $402.3 $209.4 $196.7 + 29.2% +20.5% +25.0% 2019 2020 2021 2019 2020 2021 2019 2020 2021 Net Income Earnings Per D
Slide 5: Q3 Key Takeaways – Shifting into High Gear
Q3 Key Takeaways – Shifting into High Gear Steady improvement in demand Increased dollar utilization YoY by 840 basis points to 46% in the quarter Top MSAs and focus on urban density drive greenfields and acquisition targets Completed five acquisitions since December 30, 2020 for a total purchase pr
Slide 6: Herc Rentals Today
Herc Rentals Today 56 Years serving customers 2,000 Equipment categories ~295 Locations in 39 states and five Canadian provinces 5,100 Employees serving North America $52 billion addressable market (1) Location count as of October 21, 2021 NYSE: HRI 6 ©2021 Herc Rentals Inc. All Rights Reserved.
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: Operations Review – Aaron Birnbaum
Operations Review Aaron Birnbaum Senior Vice President and Chief Operating Officer
Slide 9: 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 10: 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 2019 2020 2021 $289 $188 $210 $172 Other 22.5% $103 $109 $117 $88 $90 $63 $62 Q1 Q2 Q3 Q4 Material Handling 17.1% Fleet Disposals at OEC1 $ in millions 2019 2020 2021 Spec
Slide 11: Business Model Driving Growth
Business Model Driving Growth Q3 Revenue by Customer1 Other 25% Our diverse customer mix, our base of national customers Contractors 32% and expanded specialty business continue to provide growth opportunities Infrastructure Continuing investment in specialty businesses and Government 16% Industrial
Slide 12: Expanding through M&A
Expanding through M&A • Improve $ utilization through increased density and cross selling Herc Rentals Acquisitions Through 9/30/21 Cumulative Value • Acquiring talented workforce and local customer relationships – quicker than greenfields Average fleet: $223 million # of locations 19 • Estimated op
Slide 13: Integrating ESG: Focusing on Team Herc
Integrating ESG: Focusing on Team Herc Total Recordable Incident Rate Competitive salaries and benefits enhance retention and 1.35 attract talent 1.11 1.05 0.99 Integrating new Team Herc members from recent 0.86 0.8 acquisitions - focusing on Herc career development, internal job opportunities and t
Slide 14: Financial Review – Mark Irion
Financial Review Mark Irion Senior Vice President and Chief Financial Officer
Slide 15: 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 16: Pricing and Utilization Performance
Pricing and Utilization Performance Pricing1 Average Fleet at OEC1 2019 2020 2021 2019 2020 2021 4.6% 4.5% 4.3% 3.8% 2.0% 1.7% 3.3% 0.4% 0.7% 2.8% 2.4% 1.9% (0.5)% (1.3)% (1.9)% (5.1)% (4.5)% (6.0)% (0.3)% (0.3)% (0.8)% (0.8)% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $ Utilization2 Average Fleet on Rent at OEC1 2019
Slide 17: 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 18: 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 $59 $61 $63 Actual Forecast $55 $57 $51 $52 $52 2020 2021 2022 2023 2024 $47 $49 $49 $41 $44 $38 $38 YOY Growth (20)% +3% +8% +10% +5% $35 $31 $32 Sectors with Ta
Slide 19: Shifting Into High Gear
Shifting Into High Gear Adjusted EBITDA $ in millions 0% -2 7% $1,500 al: 1 We have clear momentum in our results and Go AGR have raised 2021 guidance three times this year 4C - '2 to our current range of $870 to $890 million '21 $1,250 $1,150 Our 2021-2024 CAGR growth goal is 17% - 20% $1,000 $1,05
Slide 20: 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 21: 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 22: Vision, Mission and Values
Vision, Mission and Values We are a customer-centric organization focused on safety, efficiency and profitable growth NYSE: HRI 22 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 23: NYSE: HRI
NYSE: HRI 23 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: Historical Fleet at OEC
Historical Fleet at OEC1 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Q1 2021 Q2 2021 Q3 2021 $ in millions 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 32: 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 32 ©2021 Herc Rentals Inc. All Rights Reserved.