Herc Holdings Inc. · NYSE:HRI
Herc — Q2 2021 Earnings Presentation
32 slides from Herc's earnings presentation, Jul 22, 2021
Slide 1: Q2 and First Half 2021 Earnings Conference Call
HERC HOLDINGS INC. Q2 and First Half 2021 Earnings Conference Call July 22, 2021 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 2: Herc Rentals Team
Herc Rentals Team Larry Silber Mark Irion President & Chief Senior Vice President & Executive Officer Chief Financial Officer Aaron Birnbaum Senior Vice President & Elizabeth Higashi Chief Operating Officer Vice President, Investor Relations & Sustainability NYSE: HRI 2 ©2021 Herc Rentals Inc. All R
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 In addition to results calculated according to accounting principles defined by the federal securi
Slide 4: Q2 2021 Takeaways - Raising Full Year Guidance
Q2 2021 Takeaways - Raising Full Year Guidance Tight Supply + Steady Demand = Good Operating Environment Industry leading rate management delivers results in favorable operating environment Strong Q2 performance provides momentum for balance of 2021 Given the current operating environment, we are ra
Slide 5: A Leader in the Equipment Rental Industry
A Leader in the Equipment Rental Industry HRI 280 (1) Listed on the New Locations in 39 states York Stock Exchange and five Canadian on July 1, 2016 provinces 56 4,800 Years in the equipment rental Employees serving industry North America (1) Location count as of July 22, 2021 NYSE: HRI 5 ©2021 Herc
Slide 6: Second Quarter 2021 Financial Highlights
Second Quarter 2021 Financial Highlights Equipment Rental Revenue Net Income $448.0M 36.8% over 2020 9.9% over 2019 $47.1M $45.1M over 2020 $37.4M over 2019 Total Revenues Earnings Per Diluted Share 33.4% over 2020 $490.9M 3.3% over 2019 $1.55 $1.48 over 2020 $1.22 over 2019 Adjusted EBITDA1 Adjuste
Slide 7: Commitment to Sustainability
Commitment to Sustainability We recently published our 2021 Corporate Citizenship Report, which aligns to the Global Reporting Initiative Standards We established three major goals for 2030 using 2019 as the base year: • Reducing our GHG emissions intensity by 25% • Reducing our non-toxic waste to l
Slide 8: Operations Review
Operations Review
Slide 9: Driving Solid Operational Performance
Driving Solid Operational Performance Q2 rental revenue growth continued to show positive performance compared to the same quarter in 2020 and 2019 Business activity solid and all of our end markets are showing positive momentum Growth in core equipment rental revenue was enhanced by ProSolutions® a
Slide 10: Focused on Health and Safety
Focused on Health and Safety Continued focus on health and safety of our employees, customers and communities New Health & Safety Management System implemented this year helps us work more safely and streamlines reviews and audits Achieved 98% Perfect Days at our branches in Q2 2021 Enhancing the we
Slide 11: Managing Fleet to Enhance Utilization
Managing Fleet to Enhance Utilization Fleet Composition at OEC 1 Fleet Expenditures at OEC1 $3.76 billion at OEC $ in millions 2019 2020 2021 Other 22.9% $289 $188 $172 $103 $109 $117 $88 $90 $63 $62 Material Handling Q1 Q2 Q3 Q4 16.7% 1 Fleet Disposals at OEC $ in millions 2019 2020 2021 Specialty
Slide 12: Business Model Driving Growth
Business Model Driving Growth Q2 Revenue by Customer1 Our diverse customer mix, our base of national customers and expanded specialty business Other 22% Contractors 31% continues to provide growth opportunities Continued investment in ProSolutions® business Infrastructure and Government 17% Entertai
Slide 13: Financial Review
Financial Review
Slide 14: Q2 & Six Months 2021 Results
Q2 & Six Months 2021 Results Three Months Ended June 30, Six Months Ended June 30, 2019 2021 vs 2020 2021 vs 2019 2019 2021 vs 2020 2021 vs 2019 2021 2020 2021 2020 $ in millions, except per share data % Change % Change % Change % Change Equipment Rental Revenue $448.0 $327.6 $407.6 36.8% 9.9% $848.
Slide 15: Pricing and Utilization Performance
Pricing and Utilization Performance Pricing 1 Average Fleet at OEC1 2019 2020 2021 2019 2020 2021 4.6% 4.5% 2.0% 1.7% 3.8% 0.4% 0.7% 3.3% 2.4% (0.5)% 1.9% (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 Average Fleet on Rent at OEC1 $ Utilization2 2019 2020 202
Slide 16: Record Q2 Adjusted EBITDA Margin
Record Q2 Adjusted EBITDA1 Margin Second Quarter Adjusted EBITDA Margins Adjusted EBITDA increased 39.0% or $58.3 (2016 through 2021) million to $207.7 million in Q2 2021 42.3% DOE increased $58.3 million primarily due to 40.6% higher personnel, delivery and freight, maintenance and re-rent expenses
Slide 17: Disciplined Capital Management
Disciplined Capital Management $141M Maturities $ in millions, as of June 30, 2021 Senior Unsecured Free cash flow3 of approximately $141 million Notes $1,200.0 in the first half 2021 ABL Credit 1.9x Facility $36.0 AR ABL Credit Finance Leases Facility1 Facility 2021-2027 $175.0 $145.0 2020 2021 202
Slide 18: A New Cycle in the Making
A New Cycle in the Making N.A. Equipment Rental Market1 Select Market Forecasts2 : ~4% AGR 5E C ’20-'2 U.S. Nonresidental Building Starts $60 $61 $58 $56 $58 Actual Forecast $55 $49 $51 $49 $51 $47 2020 2021 2022 2023 2024 $41 $44 $38 $38 $35 $31 $32 YOY Growth (20)% +3% +8% +10% +5% Sectors with Ta
Slide 19: Raising 2021 Full Year Guidance
Raising 2021 Full Year Guidance Previous Current Adjusted EBITDA $800 to $840 million $840 to $870 million Net Rental Equipment $400 to $450 million $500 to $550 million Capital Expenditures NYSE: HRI 19 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 20: Improving Metrics Position Growth and Share Value
Improving Metrics Position Growth and Share Value Adjusted EBITDA Margin1 40.8% Diversity of customers, geographic regions and 38.7% end markets will drive solid market opportunities 37.1% Focused on increased scale in high growth urban 34.6% 34.5% markets through new greenfield and M&A 33.4% opport
Slide 21: Appendix
Appendix
Slide 22: Our Strategic Initiatives are Delivering Results
Our Strategic Initiatives are Delivering Results Develop Our Expand and Improve Enhance Disciplined People and Diversify Operating Customer Capital Culture Revenues Effectiveness Experience Management Attract and retain Broaden customer Improve sales force Provide premium Drive EBITDA diverse talent
Slide 23: Margin and Net Leverage Show Positive Trends
Margin and Net Leverage Show Positive Trends Equipment Rental Revenue Adjusted EBITDA1 % R: 3.4 .5% $784.6 0 CAG GR: 6 $ in millions ’16-‘2 $ in millions 2 0 CA ’1 6 -‘ $741.0 $1,731.4 $1,701.8 $1,658.3 $684.8 $689.4 $1,543.7 $1,499.0 $585.4 $1,352.7 $536.2 2016 2017 2018 2019 2020 TTM Q2 2016 2017
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 Adjusted Net Income and Adjusted Earnings Per Diluted Share
Reconciliation of Adjusted 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, im
Slide 26: Reconciliation of Net Income to Adj. EBITDA, Adj. EBITDA Margin, REBITDA
Reconciliation of Net Income to Adj. EBITDA, 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 eq
Slide 27: Reconciliation of Net Income to Adj. EBITDA, Adj. EBITDA Margin, REBITDA
Reconciliation of Net Income to Adj. EBITDA, Adj. EBITDA Margin, Rental Adj. EBITDA (REBITDA), REBITDA Margin and Flow-Through $ in millions Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net income $47.1 $2.0 $80.0 ($1.7) Income tax provision 14.7 (1.9) 22.9 (0.8) Interes
Slide 28: REBITDA Margin Trend
REBITDA Margin Trend $ in millions Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2021 Q2 2021 Total Revenues $436.2 $368.0 $456.7 $520.4 $1,781.3 $453.8 $490.9 Less: Sales of rental equipment 40.0 31.4 45.3 81.8 198.5 44.2 30.3 Less: Sales of new equipment, parts and supplies 7.0 7.0 6.2 8.0 28.2 6.1 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 pr
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 $ in millions FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Q1 2021 Q2 2021 Beginning Balance $3,384 $3,556 $3,651 $3,777 $3,822 $3,589 $3,626 Expenditures $495 $524 $774 $627 $349 $117 $188 Disposals ($328) ($442) ($607) ($593) ($551) ($111) ($71) Foreign Currency / Other $5 $13
Slide 32: Investor Contact
Investor Contact: Elizabeth M. Higashi, CFA Vice President, Investor Relations & Sustainability elizabeth.higashi@hercrentals.com NYSE: HRI ©2021 Herc Rentals Inc. All Rights Reserved.