Herc Holdings Inc. · NYSE:HRI
Herc — Northcoast Research Fireside Chat (April 2021)
32 slides from Herc's conference presentation, Apr 29, 2021
Slide 1: Northcoast Research Fireside Chat
HERC HOLDINGS INC. Northcoast Research Fireside Chat April 29, 2021 ©2021 Herc Rentals Inc. All Rights Reserved.
Slide 2: Herc Rentals Team
Herc Rentals Team Mark Irion Senior Vice President & Chief Financial Officer Elizabeth Higashi Vice President, Investor Relations & Sustainability NYSE: HRI ©2021 Herc Rentals Inc. All Rights Reserved. 2
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: A Leader in the Equipment Rental Industry
A Leader in the Equipment Rental Industry HRI (1) Listed on the New 282 Locations in 39 states York Stock Exchange and five Canadian on July 1, 2016 provinces 56 Years in the 4,800 equipment rental Employees serving industry North America (1) Location count as of April 22, 2021 NYSE: HRI ©2021 Herc
Slide 5: 2021 Takeaways - On Our Way to a Record Year
2021 Takeaways - On Our Way to a Record Year Sequential improvement in fleet on rent throughout Q1 2021 Rental revenue growth of 3.6% driven by ProSolutions® and entertainment businesses Focus on operating leverage drove adjusted EBITDA increase of 25.0% and a 680 bps improvement in margin to 40.7%
Slide 6: First Quarter 2021 Financial Highlights
First Quarter 2021 Financial Highlights Equipment Net Income Rental Revenue Q1 Q1 $400.4M 3.6% YoY $32.9M 989.2% YoY Earnings Per Total Revenues Diluted Share Q1 Q1 $453.8M 4.0% YoY $1.09 938.5% YoY Adjusted Adjusted EBITDA EBITDA1 Margin1 Q1 Q1 $184.6M 25.0% YoY 40.7% +680 bps YoY 1. For a reconcil
Slide 7: Operations Review
Operations Review
Slide 8: Solid Operational Performance
Solid Operational Performance Rental revenue continued to improve with strong sequential growth in Q1 Diversified mix of customers, segments and geography contributed to rental revenue growth Growth was driven by strength in specialty business including ProSolutions® and entertainment-related Busine
Slide 9: Focused on Health and Safety
Focused on Health and Safety Continued focus on health and safety of our employees, customers and communities Enhancing the well-being of our team by investing in training Adhering to CDC guidelines in all of our operations and travel Refining and launching a new Health & Safety Management System th
Slide 10: Managing Fleet to Enhance Utilization
Managing Fleet to Enhance Utilization Fleet Composition at OEC1 Fleet Expenditures at OEC1 $3.63B at OEC $ in millions Fleet Disposals at OEC1 $ in millions Fleet disposals at OEC in Q1 2021 were $111 million, generating ~40% proceeds as a percent of OEC Q1 2021 $ Utilization increased to Average ag
Slide 11: Successful, Diversified Business Model
Successful, Diversified Business Model Q1 Revenue by Customer1 Our diverse customer mix, base of national customers and expanded specialty business continues to provide growth opportunities Providing excellent customer service and premium equipment to our customers Entertainment activities are excee
Slide 12: Financial Review
Financial Review
Slide 13: First Quarter 2021 Results
First Quarter 2021 Results Three Months Ended March 31, $ in millions, except per share data 2021 2020 % Chg. Equipment Rental Revenue $400.4 $386.5 3.6% Total Revenues $453.8 $436.2 4.0% Net Income (Loss) $32.9 $(3.7) NM Earnings (Loss) Per Diluted Share $1.09 $(0.13) NM Adjusted Net Income (Loss)1
Slide 14: Pricing and Utilization Performance
Pricing and Utilization Performance Pricing1 Average Fleet at OEC1 $ Utilization2 Average Fleet on Rent at OEC1 0.0% 1. YoY Change. Based on ARA guidelines. NYSE: HRI ©2021 Herc Rentals Inc. All Rights Reserved. 14 2. Based on ARA guidelines
Slide 15: Strong Margin Trends for Q1 Adjusted EBITDA
Strong Margin Trends for Q1 Adjusted EBITDA1 First Quarter Adjusted EBITDA Margins (2016 through 2021) Adjusted EBITDA increased 25.0% or $36.9 million to $184.6 million in Q1 2021 DOE fell $6.2 million primarily due to lower personnel, re-rent and maintenance expenses in Q1 2021 SG&A declined $4.3
Slide 16: Disciplined Capital Management
Disciplined Capital Management Maturities $ in millions, as of March 31, 2021 Senior $73M Unsecured Notes Free cash flow3 of approximately $73 million for Q1 2021 ABL Credit ABL Credit Facility $38.7 Facility 2.2x AR Finance Leases Facility1 2021-2027 Net leverage3 of 2.2x compared with Total debt o
Slide 17: A New Cycle in the Making
A New Cycle in the Making N.A. Equipment Rental Market1 Select Market Forecasts2 U.S. Nonresidental Building Starts History Forecast 2018 2019 2020 2021 2022 2023 2024 YOY Growth +4% +5% (22)% +3% +8% +7% +3% Sectors with Tailwinds History Forecast 2018 2019 2020 2021 2022 2023 2024 Healthcare (3)%
Slide 18: Updating 2021 Full Year Guidance
Updating 2021 Full Year Guidance Previous Current Adjusted EBITDA $730 to $760 million $800 to $840 million Net Rental Equipment Capital Expenditures $400 to $450 million $400 to $450 million NYSE: HRI ©2021 Herc Rentals Inc. All Rights Reserved. 18
Slide 19: Improving Metrics Position Future Growth
Improving Metrics Position Future Growth Adjusted EBITDA Margin1 Focus on top line growth and operating leverage to continue to improve margins over time Strong free cash flow provides liquidity for growth initiatives Will continue opening greenfield locations Net Leverage2 and seeking accretive M&A
Slide 20: Appendix
Appendix
Slide 21: 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 22: Margin and Net Leverage Show Positive Trends
Margin and Net Leverage Show Positive Trends Equipment Rental Revenue Adjusted EBITDA1 $ in millions $ in millions Adjusted EBITDA Margin1 Net Leverage2 1. 2. For a definition and reconciliation to the most comparable GAAP financial measure, see slides 25 and 26 and previously filed presentations Fo
Slide 23: 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 24: 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 25: 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 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 $ in millions Three Months Ended March 31, 2021 2020 Net income $32.9 ($3.7) Income tax provision 8.2 1.1 Interest expense, net 21.4 24.4 Depreciation of rental equipment 10
Slide 27: REBITDA Margin Trend
REBITDA Margin Trend $ in millions Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2021 Total Revenues $436.2 $368.0 $456.7 $520.4 $1,781.3 $453.8 Less: Sales of rental equipment 40.0 31.4 45.3 81.8 198.5 44.2 Less: Sales of new equipment, parts and supplies 7.0 7.0 6.2 8.0 28.2 6.1 Equipment rental, ser
Slide 28: 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 29: 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 30: Historical Fleet at OEC
Historical Fleet at OEC1 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Q1 2020 Q1 2021 $ in millions Beginning Balance $3,384 $3,556 $3,651 $3,777 $3,822 $3,822 $3,589 Expenditures $495 $524 $774 $627 $349 $109 $117 Disposals ($328) ($442) ($607) ($593) ($551) ($110) ($111) Foreign Currency / Other $5 $13
Slide 31: Fleet Mix
Fleet Mix March 31, 2021 March 31, 2020 Aerial - Booms 16.2 % 17.0 % Aerial - Scissors & Other 7.2 % 7.3 % Earthmoving - Compact 7.9 % 8.1 % Earthmoving - Heavy 5.6 % 5.7 % Material Handling - Telehandlers 13.1 % 13.6 % Material Handling - Industrial 3.9 % 4.0 % Trucks and Trailers 14.9 % 14.2 % Pro
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.
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