Herc Holdings Inc. · NYSE:HRI
Herc — Q1 2022 Earnings Presentation
30 slides from Herc's earnings presentation, Apr 21, 2022
Slide 1: Shifting Into High Gear
Shifting Into High Gear ©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: Key Takeaways – Shifting Into High Gear
Key Takeaways – Shifting Into High Gear Strong Q1 rental volume and higher YoY rates contributed to record first quarter results Increased Q1 dollar utilization YoY by 280 bps to 41.4% Outstanding performance by our sales, operations and field support teams was enhanced by steady demand and a positi
Slide 5: First Quarter Financial Highlights: Accelerating Performance
First Quarter Financial Highlights: Accelerating Performance Rental Revenues Total Revenues Adjusted EBITDA¹ $ in millions $ in millions $ in millions $567.3 $526.8 $475.7 $236.8 $453.8 $431.3 $436.2 $386.5 $400.4 +32% +25% $369.1 $377.6 $184.6 +28% $142.3 $147.7 $132.7 2018 2019 2020 2021 2022 2018
Slide 6: Herc Rentals Today
Herc Rentals Today 56 Years serving customers ~2,900 Equipment categories 320 Locations in 40 states and five Canadian provinces 1 5,700 Employees serving North America $57 billion addressable market 2 (1) Location count as of March 31, 2022 (2) ARA estimate of the 2022 North American addressable ma
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: Delivering on Growth Strategy
Delivering on Growth Strategy Average fleet at OEC increased 23% in Q1 2022 Equipment rental revenue increased 32% to a record $526.8 million Business activity is strong and all of our end markets are showing positive momentum Our core business continues to benefit from solid operating performance i
Slide 10: Diversifying Fleet to Enhance Utilization
Diversifying Fleet to Enhance Utilization Fleet Composition Fleet Expenditures at OEC1 $4.6 billion at OEC1 $ in millions 2021 2022 $253 $188 $210 $210 Other 21.6% $117 Material Q1 Q2 Q3 Q4 Handling 17.6% Fleet Disposals at OEC1 $ in millions 2021 2022 Specialty Earthmoving 24.0% 13.7% $111 $64 $71
Slide 11: Business Model Driving Growth
Business Model Driving Growth Q1 Revenue by Customer1 Other 23% Diverse customer mix and expanding base of local Contractors 33% customers continues to contribute to growth opportunities Expanding through acquisitions and greenfields in fast- Infrastructure growing urban markets to drive top-line gr
Slide 12: Integrating ESG
Integrating ESG Safety • All of our branches reported at least 98% Perfect Days in the first quarter. Perfect Days are those with no: ◦ OSHA reportable incidents ◦ at-fault moving vehicle accidents ◦ DOT violations • Continuing to integrate acquisitions into Herc's safety program Environmental • Inv
Slide 13: Financial Review – Mark Irion
Financial Review Mark Irion Senior Vice President and Chief Financial Officer
Slide 14: Q1 2022 Results
Q1 2022 Results Three Months Ended March 31, 2022 vs 2021 % 2022 2021 $ in millions, except per share data Change Equipment Rental Revenue $526.8 $400.4 31.6% Total Revenues $567.3 $453.8 25.0% Net Income $58.5 $32.9 77.8% Earnings Per Diluted Share $1.92 $1.09 76.1% Adjusted Net Income1 $59.2 $33.3
Slide 15: Pricing and Utilization Performance
Pricing and Utilization Performance Pricing1 Average Fleet at OEC1 2021 2022 2021 2022 23.4% 4.3% 3.5% 14.9% 2.8% 1.9% 4.3% (1.9)% (0.3)% (5.1)% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $ Utilization2 Average Fleet on Rent at OEC1 2021 2022 2021 2022 46.0% 29.0% 44.6% 42.1% 19.7% 21.0% 41.4% 16.0% 38.6% (1.7)% Q1 Q2
Slide 16: Disciplined Capital Management
Disciplined Capital Management No near-term maturities and ample liquidity2 of $1.0 billion provide financial flexibility Maturities $ in millions Senior Net capital expenditures outpaced cash flow from Unsecured operations resulting in negative free cash flow of $131 Notes million in Q1 2022 ABL Cr
Slide 17: A New Cycle in the Making
A New Cycle in the Making N.A. Equipment Rental Market1 Select Market Forecasts2 ~5% C A GR: U.S. Nonresidental Building Starts 5E ’21-'2 $62 $64 Actual Forecast $60 $55 $57 $52 $50 $52 2021 2022 2023 2024 2025 $47 $49 $44 $45 $41 $38 $38 YOY Growth +14% +13% +8% +5% +3% $35 $31 $32 Sectors with Tai
Slide 18: Raising Guidance
Raising Guidance • Record 2022 adjusted EBITDA of $237 million was up 28% compared with 2021 • Raising 2022 adjusted EBITDA guidance to reflect strong first quarter momentum in business • Raised and narrowed net fleet capital expenditures guidance range Metric 2021 Actual Previous 2022 Guidance New
Slide 19: Purpose, Vision, Mission and Values
Purpose, Vision, Mission and Values We equip our customers and communities to build a brighter future NYSE: HRI 19 ©2022 Herc Rentals Inc. All Rights Reserved.
Slide 20: NYSE: HRI
NYSE: HRI 20 ©2022 Herc Rentals Inc. All Rights Reserved.
Slide 21: 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 22: Our Strategy is Delivering Results
Our Strategy is Delivering Results Equipment Rental Revenue $ Utilization1 $ in millions $2,037 43.0% 43.3% $1,910 38.7% $1,702 $1,658 37.4% 36.0% 36.1% $1,544 $1,499 2017 2018 2019 2020 2021 TTM 2022 2017 2018 2019 2020 2021 TTM 2022 Adjusted EBITDA Margin1 Net Leverage2 43.2% 43.3% 3.6x 3.1x 38.7%
Slide 23: 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 24: 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 25: 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 March 31, 2022 2021 Net income $58.5 $32.9 Income tax provision 8.6 8.2 Interest expense, net 22.5 21.4 Depreciation of rental equipment
Slide 26: REBITDA Margin Trend
REBITDA Margin Trend $ in millions Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Total Revenues $453.8 $490.9 $550.4 $578.0 $2,073.1 $567.3 Less: Sales of rental equipment 44.2 30.3 16.6 22.0 113.1 27.7 Less: Sales of new equipment, parts and supplies 6.1 7.8 8.6 7.6 30.1 7.7 Equipment rental, ser
Slide 27: 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 28: 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 29: Historical Fleet at OEC
Historical Fleet at OEC1 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Q1 2022 $ in millions Beginning Balance $3,556 $3,651 $3,777 $3,822 $3,589 $4,381 Expenditures $524 $774 $627 $349 $725 $253 Disposals ($442) ($607) ($593) ($551) ($286) ($64) Foreign Currency / Other(2) $13 ($41) $11 ($31) $353 $23 En
Slide 30: 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 30 ©2022 Herc Rentals Inc. All Rights Reserved.