Herc Holdings Inc. · NYSE:HRI
Herc — Investor Presentation (March 2017)
42 slides from Herc's investor presentation, Mar 22, 2017
Slide 1: Herc Holdings Inc. Investor Presentation
Herc Holdings Inc. Investor Presentation March 22 -23, 2017
Slide 2: Safe Harbor Statements
NYSE: HRI Safe Harbor Statements 2 Basis of Presentation The financial information included in this presentation is based upon the condensed consolidated and combined financial statements of the Company which are presented on a basis of accounting that reflects a change in reporting entity and have
Slide 3: Safe Harbor Statements - Continued
NYSE: HRI Safe Harbor Statements - Continued 3 Risks related to the spin-off, which effected our separation from New Hertz, such as: we receive certain transition services from New Hertz pursuant to the transition services agreement covering IT services and other areas, which impact our control en
Slide 4: Safe Harbor Statements - Continued
NYSE: HRI Safe Harbor Statements - Continued 4 o other operational risks such as: any decline in our relations with our key national account customers or the amount of equipment they rent from us; our equipment rental fleet is subject to residual value risk upon disposition, and may not sell at the
Slide 5: Information Regarding Non-GAAP Financial Measures
NYSE: HRI Information Regarding Non-GAAP Financial Measures 5 In addition to results calculated according to accounting principles generally accepted in the United States (“GAAP”), the Company has provided certain information in this presentation which is not calculated according to GAAP (“non-GAAP”
Slide 6: Became a Stand-alone Public Company in 2016
NYSE: HRI We aspire to be the supplier, employer and investment of choice in our industry. Became a Stand-alone Public Company in 2016 6 • Recruited experienced and industry savvy senior management team to lead separation from Hertz’s rental car business • Separated from Hertz on June 30, 2016 • Beg
Slide 7: Highly Experienced Leadership Team
NYSE: HRI Carlo Cavecchi Paul Dickard Elizabeth Higashi Charles Miller Nancy Merola Jason Oosterbeek VP, ProSolutions VP, Communications VP, Investor Relations VP, Operations VP, Chief Accounting Officer VP, Pricing & Sales Strategy 30+ years 25 years 30+ years 30+ years 30+ years 15+ years Highly E
Slide 8: Reinvigorated Organization With a Customer-Centric Culture
NYSE: HRI Reinvigorated Organization With a Customer-Centric Culture and Increased Focus on Operating Efficiency and Safety Our Vision To ensure that end users of our equipment and services achieve optimal performance safely, efficiently and effectively. Our Mission Our Values We do what’s right. We
Slide 9: Company Overview
NYSE: HRI ProSolutions and ProContractor 18% Core 82% Company Overview 9 Construction 37% Other Customers 43% Industrial 20% One of the leading North American equipment rental companies Approximately 270 locations globally 3% market share in a highly fragmented market $3.56 billion in fleet
Slide 10: Market Leader with Significant Scale and Broad Footprint
NYSE: HRI Market Leader with Significant Scale and Broad Footprint 10 Approximately 270 locations in North America
Slide 11: Industry Outlook Highlights
NYSE: HRI Industry Outlook Highlights 11 Positive market growth and further penetration of rental solutions expected to continue 1 The American Institute of Architects (AIA). 2 ARA / IHS Global Insight as of February 2017, excludes Party & Event data. 3 Dodge Analytics. 4 Industrial information reso
Slide 12: Strategic Direction
NYSE: HRI Strategic Direction 12 Disciplined Capital Management Expand and Diversify Revenues Improve Operating Efficiencies Enhance Customer Experience On the Path Forward • Broaden customer base • Expand products and services • Increase density • Grow ancillary revenues • Improve vendor management
Slide 13: Expand and Diversify Revenues: Broaden the Customer Base
NYSE: HRI Expand and Diversify Revenues: Broaden the Customer Base 13 • Building Services • Convention and Trade Shows • Repair Services • Flooring Contractors • Facilities Support Services • Carpentry Contractors • Personal and Household Goods Repair and Maintenance • Finish Carpentry Contractors •
Slide 14: Expand Products and Services with ProSolutions
NYSE: HRI Expand and Diversify Revenues: Expand Products and Services with ProSolutionsTM 14 PUMPPOWER INDUSTRIAL TOOLS AIR CONDITIONERS PORTABLES DEHUMIDIFICATIONCHILLERS HEAT
Slide 15: Increase Density in High Growth Urban Markets
NYSE: HRI Expand and Diversify Revenues: Increase Density in High Growth Urban Markets and Focus on Higher Margin Equipment 1 Industry data and estimates for rates and time utilization OEC $136,000 Monthly Rate $4,200 Time Utilization 75.0% Estimated Annual Revenue $37,800 Estimated $ Ute 28% OEC $1
Slide 16: Improve Vendor Management and Fleet Availability
NYSE: HRI Q2 2015 Q1 20164 2016 Improve Operating Efficiencies: Improve Vendor Management and Fleet Availability Driving operational gains through buying efficiency and increased availability Consolidate Brands and OEMs Increase Fleet Available to Rent 40% # of Suppliers Lower vendor count = better
Slide 17: Enhance Customer Experience: Become the Supplier of Choice
NYSE: HRI Enhance Customer Experience: Become the Supplier of Choice Best in class brands combined with a comprehensive suite of services help customers work more efficiently, effectively and safely Consultive solutions Subject-matter experts Delivering Premium Products Delivering Solutions-Based Pr
Slide 18: Disciplined Capital Management: Drive EBITDA Growth
NYSE: HRI Disciplined Capital Management: Drive EBITDA Growth Long term, Adjusted EBITDA is targeted to meet or exceed peer metrics with ROIC expected to exceed cost of capital Improvement Opportunity Initiatives underway Shift Equipment Portfolio Mix Adding ProSolutions and ProContractor Tools eq
Slide 19: On the Path Forward
NYSE: HRI On the Path Forward
Slide 20: Transformation in Process
NYSE: HRI Transformation in Process 20 Executing our strategy and driving improvements in operating performance Successfully diversifying fleet mix to higher dollar utilization equipment categories Achieving above market growth in major urban locations Growing local rental revenues faster th
Slide 21: Expand and Diversify Revenues: Key Accomplishments
NYSE: HRI Expand and Diversify Revenues 21 Increased sales force as part of territory optimization to drive revenue growth Continued to successfully diversify fleet to attract “square-footage-under-roof” customers Shifted to higher $ Utilization equipment showing results in major urban locatio
Slide 22: Diversifying the Fleet to Maximize Dollar Utilization
NYSE: HRI Diversifying the Fleet to Maximize Dollar Utilization 22 Aerial - Booms 19.3% Aerial - Scissors & Other 6.4% Earthmoving - Heavy 10.7% Earthmoving - Compact 7.5%Material Handling - Telehandlers 13.5% Material Handling - Industrial 3.2% Trucks and Trailers 12.9% ProSolutions 13.4% ProContra
Slide 23: Improve Operating Efficiencies: Key Accomplishments
NYSE: HRI Improve Operating Efficiencies 23 Reduced FUR to 15.3% in December 2016 compared to 15.9% in the prior year Improved fleet, parts and service costs through vendor management Focused on enhancing salesforce effectiveness through by driving the right behaviors Continued to improve sa
Slide 24: Enhance Customer Experience: Key Accomplishments
NYSE: HRI Enhance Customer Experience 24 Expanded ProSolutions Centers of Excellence to approximately 30 locations Continued to upgrade branches to showcase ProContractor equipment Focused on maintenance and service initiatives to better serve customers Shifted core OEC categories to premium
Slide 25: Financial Overview
NYSE: HRI Financial Overview 25
Slide 26: Financial Highlights
NYSE: HRI Financial Highlights 26 Q4 2016 FY 2016 Equipment Rental Revenues $356.7 million $1,352.7 million Equipment Rental Revenue Growth1 + 6.2% in Key Markets2; 84% of total + 1.3% YoY Overall2 + 8.1% in Key Markets2; 83% of total + 0.5% YoY Overall2 Pricing + 1.5% YoY in Key Markets
Slide 27: Q4 and Full Year Equipment Rental Revenues
NYSE: HRI Q4 and Full Year Equipment Rental Revenues 27 $ in millions Equipment rental revenue increased +6.2% in key markets, excluding divestitures and currency Key markets represented 84% of rental revenue • Key markets increase attributable to: - Traction of urban market strategy - ProSoluti
Slide 28: Q4 and Full Year Total Revenues
NYSE: HRI Q4 and Full Year Total Revenues 28 2015 included revenue from divested foreign operations Sales of revenue earning equipment declined YoY due to high volume of disposals from oil & gas regions in 2015 New equipment sales were also lower due to focus on higher-margin rental activities
Slide 29: Q4 and Full Year Net Income
NYSE: HRI Q4 and Full Year Net Income 29 $ in millions 2015 included Q4 gain on divestiture Interest expense for second half 2016 reflects debt on a stand-alone basis Fleet depreciation increased due to fleet growth and normal course rate review Losses on sales of revenue earning equipment d
Slide 30: Q4 and Full Year Adjusted EBITDA
NYSE: HRI Q4 and Full Year Adjusted EBITDA1 30 $ in millions Q4 Adjusted EBITDA Bridge 2 Full Year Adjusted EBITDA Bridge 2 Q4 Summary Key markets mostly offset oil and gas decline Full Year Summary $536.2$18.4 $31.1 $9.7 $50.7 $45.5 $600.6 200 250 300 350 400 450 500 550 600 650 2015 France & Spa
Slide 31: Fleet Capital Expenditures
NYSE: HRI Fleet Capital Expenditures 31 Average fleet original equipment cost (OEC). Net Fleet Capex for the full year 2016 was $352.9 million as we successfully disposed of low performing fleet sooner than anticipated while achieving fleet diversification targets In 2016, received $115.4 millio
Slide 32: Debt and Liquidity
NYSE: HRI Debt and Liquidity 32 Debt Ample Liquidity $ in millions, as of 12/31/16 $910.0 $610.0 $625.0 '17 '18 '19 '20 '21 '22 '23 '24 Total Liquidity $ 828.7 Cash and Cash Equivalents 11.6 ABL Availability 817.1 Facility 1,750.0 Outstanding (910.0) Letters of Credit (22.9) ABL Credit Facility Seni
Slide 33: In Summary
NYSE: HRI In Summary • Gained traction in introducing new products across branch network • Accelerated branch performance in urban markets • Improved operating efficiencies • Improved sales force effectiveness through training and productivity tools • Achieved growth in ancillary revenues • Continue
Slide 34: Appendix
NYSE: HRI Appendix 34
Slide 35: Glossary of Terms Commonly Used in the Industry
NYSE: HRI Glossary of Terms Commonly Used in the Industry 35 OEC: Original Equipment Cost which is an operating measure based on the guidelines of the American Rental Association, which is calculated as the cost of the asset at the time it was first purchased plus additional capitalized refurbishmen
Slide 36: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
NYSE: HRI Reconciliation of Net Income to EBITDA and Adjusted EBITDA 36 EBITDA and Adjusted EBITDA are not recognized terms 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 ident
Slide 37: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
NYSE: HRI Reconciliation of Net Income to EBITDA and Adjusted EBITDA 37 $ in millions Three months ended December 31, Year Ended December 31, 2016 2015 2016 2015 Net income (loss) $ (13.2) $ 78.2 $ (19.7) $ 111.3 Provision for income taxes 5.8 16.9 14.8 45.6 Interest expense, net 32.1 5.1 84.2 32.9
Slide 38: Adjusted Revenue Reconciliation
NYSE: HRI 38 Year Ended December 31, 2016 Actual Sale of France and Spain Foreign Currency Translation Year Ended December 31, 2016 Adjusted Total revenues $ 1,554.8 $ 0 $ 8.1 $1,562.9 Equipment rental revenue 1,352.7 0 6.6 1,359.3 Year Ended December 31, 2015 Actual Sale of France and Spain Foreign
Slide 39: Reconciliation of Free Cash Flow
NYSE: HRI Reconciliation of Free Cash Flow 39 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
Slide 40: Reconciliation of Free Cash Flow
NYSE: HRI Reconciliation of Free Cash Flow 40 $ in millions Year Ended December 31, 2016 Net cash provided by operating activities $ 433.4 Revenue earning equipment expenditures ( (468.3) Proceeds from disposal of revenue earning equipment 115.4 Non-rental capital expenditures (47.8) Proceeds from d
Slide 41: Herc Rentals Corporate History & Key Events
NYSE: HRI Herc Rentals Corporate History & Key Events 19731968 2008 2010 20141965 2015 Introduced industry-first National Accounts program Herc Rentals Founded Rolled out new standardized locations 1979 Entered industrial equipment rental & leasing markets 1989 New HERC President named Lau
Slide 42: Herc Rentals
HercRentals