Click to edit Master title style
Click to edit Master subtitle style
Herc Holdings Inc.
Q4 and Full Year ending December 31, 2016
Preliminary Results
March 1, 2017
Agenda
2
Welcome and Introductions Elizabeth Higashi
Vice President, Investor Relations
Strategic Update and Industry
Outlook
Larry Silber
President and Chief Executive Officer
Q4 and Full Year Preliminary
Financial Review
Barbara Brasier
Senior Vice President and Chief Financial Officer
Q&A
Larry Silber
Barbara Brasier
Bruce Dressel
Senior Vice President and Chief Operating Officer
NYSE: HRI
Safe Harbor Statements
Basis of Presentation
The financial results discussed in this presentation are preliminary and unaudited and subject to change as the Company’s financial results are finalized. 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 been adjusted for the effects of the spin-off, which effected our separation
from Hertz Rental Car Holding Company, Inc. (“New Hertz”). These financial statements and financial information represent only those operations, assets, liabilities
and equity that form Herc Holdings on a stand-alone basis. Since the spin-off occurred on June 30, 2016, the financial statements represent the carve-out financial
results for the Company for the first six months of 2016, including spin-off impacts through June 30, 2016, and actual results for the second half of 2016, including
the three months ended December 31, 2016. All prior period amounts represent carve-out financial results.
Forward-Looking Statements
This presentation contains statements that are not statements of historical fact, but instead are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. We caution readers not to place undue reliance on these statements, which speak only as of the date hereof. There are a
number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those suggested by our forward-looking
statements, including:
Risks related to material weaknesses in our internal control over financial reporting and the restatement of financial statements previously issued by Hertz Global
Holdings, Inc. (in its form prior to the spin-off, “Hertz Holdings”), including that: we have identified material weaknesses in our internal control over financial
reporting that may adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, which may adversely
affect investor and lender confidence in us and, as a result, the value of our common stock and our ability to obtain future financing on acceptable terms, and we
may identify additional material weaknesses as we continue to assess our processes and controls as a stand-alone company with lower levels of materiality;
such material weaknesses could result in a material misstatement of our consolidated and combined financial statements that would not be prevented or
detected; we continue to expend significant costs and devote management time and attention and other resources to matters related to our internal control over
financial reporting and Hertz Holdings' restatement, which could adversely affect our ability to execute our strategic plan; our efforts to design and implement an
effective control environment may not be sufficient to remediate the material weaknesses or prevent future material weaknesses; our material weaknesses and
Hertz Holdings' restatement could expose us to additional risks that could materially adversely affect our financial position, results of operations and cash flows,
including as a result of events of default under the agreements governing our indebtedness and/or government investigations, regulatory inquiries and private
actions; we may experience difficulties implementing new information technology systems to maintain our books and records and provide operational information
to our management team; if we decide to not implement the new operational system for our back office processes, we could need to expense items that were
previously capitalized, which could result in a substantial charge in our results of operations; we could experience disruptions to our control environment in
connection with the relocation of our Shared Services Center, including as a result of the failure to retain key employees who possess specific knowledge or
expertise necessary for the timely preparation of our financial statements; and Hertz Holdings' restatement has resulted in government investigations, books and
records demands, and private litigation and could result in government enforcement actions and private litigation that could have a material adverse impact on
our results of operations, financial condition, liquidity and cash flows;
3NYSE: HRI
Safe Harbor Statements - Continued
4NYSE: HRI
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 environment and, therefore, our internal control over financial
reporting; we have limited operating history as a stand-alone public company, and our historical financial information for periods prior to July 1, 2016, is not
necessarily representative of the results that we would have achieved as a separate, publicly traded company, and may not be a reliable indicator of our future
results; the liabilities we have assumed and will share with New Hertz in connection with the spin-off could have a material adverse effect on our business,
financial condition and results of operations; if there is a determination that any portion of the spin-off transaction is taxable for U.S. federal income tax purposes,
including for reasons outside of our control, then we and our stockholders could incur significant tax liabilities, and we could also incur indemnification liability if
we are determined to have caused the spin-off to become taxable; if New Hertz fails to pay its tax liabilities under the tax matters agreement or to perform its
obligations under the separation and distribution agreement, we could incur significant tax and other liability; our ability to engage in financings, acquisitions and
other strategic transactions using equity securities is limited due to the tax treatment of the spin-off; the loss of the Hertz brand and reputation could materially
adversely affect our ability to attract and retain customers; the spin-off may be challenged by creditors as a fraudulent transfer or conveyance; and if the spin-off
is not a legal dividend, it could be held invalid by a court and have a material adverse effect on our business, financial condition and results of operations;
Business risks could have a material adverse effect on our business, results of operations, financial condition and/or liquidity, including:
o the cyclicality of our business, a slowdown in economic conditions or adverse changes in the economic factors specific to the industries in which we
operate, in particular industrial and construction;
o the dependence of our business on the levels of capital investment and maintenance expenditures by our customers, which in turn are affected by
numerous factors, including the level of economic activity in their industries, the state of domestic and global economies, global energy demand, the
cyclical nature of their markets, expectations regarding government spending on infrastructure improvements or expansions, their liquidity and the
condition of global credit and capital markets;
o we may have difficulty obtaining the resources that we need to operate, or our costs to do so could increase significantly;
o intense competition in the industry, including from our own suppliers, that may lead to downward pricing or an inability to increase prices;
o any occurrence that disrupts rental activity during our peak periods given the seasonality of the business, especially in the construction industry;
o doing business in foreign countries exposes us to additional risks, including under laws and regulations that may conflict with U.S. laws and those under
anticorruption, competition, economic sanctions and anti-boycott regulations;
o our success as an independent company will depend on our new senior management team, the ability of other new employees to learn their new roles,
and our ability to attract and retain key management and other key personnel;
o some or all of our deferred tax assets could expire if we experience an “ownership change” as defined in the Internal Revenue Code;
o changes in the legal and regulatory environment that affect our operations, including with respect to taxes, consumer rights, privacy, data security and
employment matters, could disrupt our business and increase our expenses;
o an impairment of our goodwill or our indefinite lived intangible assets could have a material non-cash adverse impact;
Safe Harbor Statements - Continued
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 prices we expect; we may be unable to protect our trade
secrets and other intellectual property rights; we may fail to respond adequately to changes in technology and customer demands; our business is heavily
reliant upon communications networks and centralized information technology systems and the concentration of our systems creates or increases risks for
us, including the risk of the misuse or theft of information we possess, including as a result of cyber security breaches or otherwise, which could harm our
brand, reputation or competitive position and give rise to material liabilities; failure to maintain, upgrade and consolidate our information technology
networks could materially adversely affect us; we may face issues with our union employees; we are exposed to a variety of claims and losses arising from
our operations, and our insurance may not cover all or any portion of such claims; environmental, health and safety laws and regulations and the costs of
complying with them, or any change to them impacting our customers’ markets could materially adversely affect us; decreases in government spending
could materially adversely affect us; maintenance and repair costs associated with our equipment rental fleet could materially adversely affect us; and
strategic acquisitions could be difficult to identify and implement and could disrupt our business or change our business profile significantly;
Risks related to our substantial indebtedness, such as: our substantial level of indebtedness exposes us or makes us more vulnerable to a number of risks that
could materially adversely affect our financial condition, results of operations, cash flows, liquidity and ability to compete; the secured nature of our indebtedness,
which is secured by substantially all of our consolidated assets, could materially adversely affect our business and holders of our debt and equity; an increase in
interest rates or in our borrowing margin would increase the cost of servicing our debt and could reduce our profitability; and any additional debt we incur could
further exacerbate these risks;
Risks related to the securities market and ownership of our stock, including that: the market price of our common stock may fluctuate significantly; the market
price of our common stock could decline as a result of the sale or distribution of a large number of our shares or the perception that a sale or distribution could
occur and these factors could make it more difficult for us to raise funds through future stock offerings; and provisions of our governing documents could
discourage potential acquisition proposals and could deter or prevent a change in control; and
Other risks and uncertainties set forth in the Form 12b-25 filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017, in the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 in Part II under Item 1A “Risk Factors” and in our other filings with the SEC.
All forward-looking statements are expressly qualified in their entirety by such cautionary statements. We do not undertake any obligation to release publicly any
update or revision to any of the forward-looking statements.
5NYSE: HRI
Information Regarding Non-GAAP Financial Measures
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”), such as adjusted EBITDA and free cash flow. Management uses these non-GAAP
measures to evaluate operating performance and period-over-period performance of our core business without regard to potential distortions, and believes that
investors will likewise find these non-GAAP measures useful in evaluating the Company’s performance. These measures are frequently used by security analysts,
institutional investors and other interested parties in the evaluation of companies in our industry.
Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may
not be comparable to similarly titled measures of other companies. For the definitions of these terms, further information about management’s use of these
measures as well as a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures, please see the Appendix to this
presentation.
Herc Holdings does not provide forward-looking guidance for certain financial measures on a GAAP basis or a reconciliation of forward-looking non-GAAP financial
measures to the most directly comparable GAAP reported financial measures on a forward-looking basis because it is unable to predict certain items contained in
the GAAP measures without unreasonable efforts. Certain items that impact net income (loss) cannot be predicted with reasonable certainty, such as restructuring
and restructuring related charges, special tax items, borrowing levels (which affect interest expense), gains and losses from asset sales, the ultimate outcome of
pending litigation and spin-related costs.
6NYSE: HRI
Transformation in Process
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 than
growth in national accounts
Improving fleet availability
Reducing equipment, parts and service costs
through better vendor management
Enhancing customer service through key
initiatives such as premium brands and new
technologies
7NYSE: HRI
Preliminary Financial Highlights
8
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
+ 0.5% YoY Overall
+ 1.6% YoY in Key Markets
+ 0.3% YoY Overall
Net Income (Loss) ($14.0) million ($20.5) million
Adjusted EBITDA3
$145.7 million
36.0% margin
$536.2 million
34.5% margin
1 Excluding operations in France & Spain and impact of foreign currency translation.
2 Key markets are defined as markets we currently serve outside of upstream oil and gas markets, overall refers to all markets.
3 For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on slide 26.
NYSE: HRI
On the Path Forward
9NYSE: HRI
• Herc Holdings
began trading
on the NYSE
on July 1, 2016
Herc
Holdings
Spin
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
and fleet
availability
• Drive operating
performance
through mix
and volume
• Focus on safety
and labor
productivity
• Provide
premium
products and
services
• Introduce
innovative
technology
solutions
Expand and Diversify Revenues
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 locations
Increased Local as a % of total rental to
53% in the fourth quarter
Increased ancillary revenue 15% in the
quarter and 17% for the year compared
with 2015
10NYSE: HRI
• Broaden
customer base
• Expand
products and
services
• Increase
density
• Grow ancillary
revenues
Key Accomplishments
Diversifying the Fleet to Maximize Dollar Utilization
11NYSE: HRI
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%
ProContractor
4.7%
Air
Compressors
3.0%
Other
2.0%
Lighting
1.7%
Compaction
1.7%
Aerial - Booms
20.3%
Aerial -
Scissors &
Other
5.7%
Earthmoving -
Heavy
12.4%
Earthmoving -
Compact
6.5%
Material Handling -
Telehandlers
13.9%
Material
Handling -
Industrial
3.1%
Trucks and
Trailers
13.8%
ProSolutions
12.4%
ProContractor
3.4%
Air
Compressors
3.1%
Other
2.1%
Lighting
1.7%
Compaction
1.6%
OEC as of 12/31/2015 OEC as of 12/31/2016
Increased
• Aerial - Scissor Lifts
• Earthmoving - Compact
• ProContractorTM and ProSolutionsTM
Reduced
• Aerial - Booms
• Earthmoving - Heavy
• Material Handling - Telehandlers
Improve Operating Efficiencies
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 safety performance and enhance
safety culture – 45,000 hours of safety training in FY 2016
12NYSE: HRI
• Improve vendor
management
and fleet
availability
• Drive operating
performance
through mix and
volume
• Focus on safety
and labor
productivity
Key Accomplishments
Enhance Customer Experience
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
equipment that has broader customer
appeal
Rolled out ProControl™ telematics to
strategic customers
13NYSE: HRI
• Provide
premium
products and
services
• Introduce
innovative
technology
solutions
Key Accomplishments
Industry Outlook Highlights
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 resources.
$38
$31 $32
$35
$38
$41
$44
$47 $49
$51 $53
$56 $58
08 09 10 11 12 13 14 15 16 17E 18E 19E 20E
($ in billions)
N.A. Equipment Rental Market 2
14NYSE: HRI
as of February 2017
Non-Residential Starts 3
Architecture Billings Index 1
Industrial Spending 4
$297.9
$310.4
2016 2017E
J
a
n
-9
6
J
a
n
-0
0
J
a
n
-0
4
J
a
n
-0
8
J
a
n
-1
2
J
a
n-
1
6
50
$235
$249
$272
$281
$100
$150
$200
$250
$300
$350
2016 2017E 2018E 2019E
($ in millions)
Jan
49.5
as of Q1 2017
as of January 2017
as of Q1 2017
($ in millions)
• Key industry metrics
remain positive – non-
res construction growth
of 4.6% projected
through 2019
• American Rental
Association (ARA)
forecasts North
American equipment
rental growth of 4.4%
through 2020
• Industrial spending is
expected to grow 4.2%
in 2017
• Continuing shift from
ownership to rental will
fuel growth
On the Path Forward
15NYSE: HRI
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
and fleet
availability
• Drive operating
performance
through mix
and volume
• Focus on safety
and labor
productivity
• Provide
premium
products and
services
• Introduce
innovative
technology
solutions
• Drive EBITDA
margin growth
• Improve key
financial
metrics
Preliminary Financial Overview
16
Q4 and Full Year Preliminary Financial Summary
17NYSE: HRI
$ in millions, except EPS
Three Months Ended
December 31,
Year Ended
December 31,
2016 2015 2016 2015
Equipment Rental Revenues $ 356.7 $ 359.2 $ 1,352.7 $ 1,411.7
Total Revenues 405.2 422.4 1,554.8 1,678.2
Net Income (Loss) (14.0) 78.2 (20.5) 111.3
Diluted Earnings (Loss) Per Share (0.49) 2.68 (0.72) 3.69
Adjusted EBITDA1 $ 145.7 $ 163.8 $ 536.2 $ 600.6
1 For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on slide 26.
Q4 and Full Year Preliminary Equipment Rental Revenues
18
$ 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
- ProSolutions growth year-over-year
- Core business improvement
Pricing increased 1.5% YoY in key markets
and 0.5% overall
Equipment rental revenue increased +8.1% in
key markets, excluding divestitures and
currency
Key markets represented 83% of rental
revenue
Rate of oil and gas decline continues to
diminish as comparable periods are lapped
Q4 Equipment Rental Revenue Bridge
Full Year Equipment Rental Revenue Bridge
NYSE: HRI
Q4 Summary
Full Year Summary
$ 356.7
$7.0 $13.0
$17.5$359.2
0
50
100
150
200
250
300
350
400
2015 France & Spain and
currency translation
Key markets Oil and gas 2016
$1,352.7
$66.2 $77.9
$85.1
$1,411.7
800
900
1,000
1,100
1,200
1,300
1,400
1,500
2015 France & Spain and
currency translation
Key markets Oil and gas 2016
19NYSE: HRI
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
Q4 Total Revenue Bridge
Full Year Total Revenue Bridge
$ in millions
Q4 and Full Year Summary
Q4 and Full Year Preliminary Total Revenues
$405.2
$10.4 $5.1
$6.2
$4.5$422.4
200
250
300
350
400
450
2015 France & Spain and
currency translation
Equipment rental
revenue
Sales of revenue
earning equipment
Sales of new
equipment and other
2016
$1,554.8
$77.9 $31.2
$21.5
$7.2
$1,678.2
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
2015 France & Spain and
currency translation
Equipment rental
revenue
Sales of revenue
earning equipment
Sales of new
equipment and other
2016
20NYSE: HRI
$ 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 diminished in second half
Increase in spin-off costs: IT and
professional expenses related to the spin
transaction
Q4 and Full Year Summary
Q4 and Full Year Preliminary Net Income
1 Interest expense, depreciation of REE and losses on sales of REE attributable to
France & Spain are included in the category labeled “France & Spain and currency
translation.”
$(20.5)
$43.8 $24.1
$31.1
$23.5
$56.2
$30.0
$16.9
$111.3
(35)
(15)
5
25
45
65
85
105
125
2015 France & Spain
and currency
translation
Tax expense Depr.
of REE
All Other Loss on sales
of REE
Spin-off costs Interest
expense
2016
$(14.0)
$50.0 $11.0
$5.0 $3.7
$5.4
$27.4
$10.3
$78.2
(20)
0
20
40
60
80
100
2015 France & Spain
and currency
translation
Tax
expense
Depr.
of REE
All Other Loss on sales of
REE
Spin-off costs Interest
expense
2016
Q4 Net Income Bridge
Full Year Net Income Bridge
111
1 1 1
21NYSE: HRI
$ in millions
Q4 Adjusted EBITDA Bridge 2
Full Year Adjusted EBITDA Bridge 2
Q4 Summary
Q4 and Full Year Preliminary Adjusted EBITDA1
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 & Spain
and currency
translation
Loss on sales of
revenue earning
equipment
Stand-alone
costs
Key markets Oil and gas 2016
$145.7$2.3 $3.7 $6.1
$7.4
$1.4
$163.8
0
20
40
60
80
100
120
140
160
180
2015 France &
Spain and
currency
translation
Loss on sales of
revenue earning
equipment
Stand-alone costs Key markets Oil and gas 2016
Oil and gas impacted by YoY revenue
headwinds which continue to diminish as
comparable periods are lapped
1 For a reconciliation to the most comparable GAAP financial measure, see the
Appendix beginning on slide 26.
2 Corporate G&A costs allocated pro rata between “Key markets” and “Oil and gas”
Preliminary Fleet Capital Expenditures
22
Average fleet original equipment cost (OEC).
NYSE: HRI
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 million in proceeds from disposal of equipment with an
approximate OEC of $313 million
Rental equipment at OEC 2 was $3.56 billion as of December 31, 2016
Average rental equipment at OEC2 for the full year ended December 31, 2016, grew 3.4%
versus the prior year, excluding divestitures
Dollar utilization was 35.1% for the fourth quarter 2016
$ in millions Year Ended December 31,
2016 2015 $ Variance
Total Revenue Earning Equipment Expenditures $ 468.3 $ 600.0 $ (131.7)
Revenue Earning Equipment Disposals $ (115.4) $ (151.9) $ 36.5
Net Fleet Capital Expenditures 1 $ 352.9 $ 448.1 $ (95.2)
1 Cash flow basis.
2 Based on ARA guidelines.
Preliminary Debt and Liquidity
23
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
Senior Secured
Second Priority Notes
Capital
Leases
$70.3
Stable debt with long dated maturities provide financial flexibility
Total debt of $2.2 billion as of December 31, 2016
Maintained ample liquidity during the quarter - $828.7 million as of December 31, 2016
Net cash provided by operating activities was $449.7 million - strong free cash flow1 for FY 2016
of $51.3 million
Gave notice of redemption of 10% of the outstanding senior notes at 103% of aggregate
principal amount plus interest under the terms of the indenture
NYSE: HRI
1 For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on slide 26.
Full Year 2017 Guidance1
24NYSE: HRI
Adjusted EBITDA $550 million to $590 million
Net Fleet Capital Expenditures2 $275 million to $325 million
1 Herc Holdings does not provide forward-looking guidance for certain financial measures on a GAAP basis or a
reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP reported financial
measures on a forward-looking basis because it is unable to predict certain items contained in the GAAP measures
without unreasonable efforts. Certain items that impact net income (loss) cannot be predicted with reasonable certainty,
such as restructuring and restructuring related charges, special tax items, borrowing levels (which affect interest
expense), gains and losses from asset sales, the ultimate outcome of pending litigation and spin-related costs.
2 Cash flow basis.
In Summary
• Gained traction in introducing new products across
branch network
• Accelerated branch performance in urban markets
• Improved operating efficiencies
• Improved sales force effectiveness through training
and productivity tools
• Achieved growth in ancillary revenues
• Continued to drive safety as our #1 priority throughout
the organization
25NYSE: HRI
Appendix
26
Glossary of Terms Commonly Used in the Industry
27NYSE: HRI
OEC: Original Equipment Cost which is an operating measure based on the guidelines of the American Rental
Association, which is calculated as the cost of the asset at the time it was first purchased plus additional capitalized
refurbishment costs (with the basis of refurbished assets reset at the refurbishment date).
1
Fleet Age: The OEC weighted age of the entire fleet.
2
Net Fleet Capital Expenditures: Capital expenditures of revenue earning equipment minus the proceeds from
disposal of revenue earning equipment.
3
Dollar Utilization ($ Ute): Dollar utilization is an operating measure calculated by dividing rental revenue by the
average OEC of the equipment fleet for the relevant time period.
4
Pricing: Change in pure pricing achieved in one period versus another period. This is applied both to year-over-year
and sequential comparisons. Rental rates are calculated based on the category class rate variance achieved either
year-over-year or sequentially for any fleet that qualifies for the fleet base and weighted by the prior year revenue mix.
5
FUR: Fleet unavailable for rent.
6
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
28NYSE: HRI
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 identical calculations, our definition and
presentation of these measures may not be comparable to similarly titled measures reported by
other companies.
EBITDA and Adjusted EBITDA - EBITDA represents the sum of net income (loss), provision for
income taxes, interest expense, net, depreciation of revenue earning equipment and non-rental
depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of merger and
acquisition related costs, restructuring and restructuring related charges, spin-off costs, non-cash
stock based compensation charges, loss on extinguishment of debt, impairment charges, gain on
disposal of a business and certain other items. Management uses EBITDA and Adjusted EBITDA
to evaluate operating performance and period-over-period performance of our core business
without regard to potential distortions, and believes that investors will likewise find these non-
GAAP measures useful in evaluating the Company’s performance. These measures are
frequently used by security analysts, institutional investors and other interested parties in the
evaluation of companies in our industry. However, EBITDA and Adjusted EBITDA do not purport to
be alternatives to net earnings as an indicator of operating performance. Additionally, neither
measure purports to be an alternative to cash flows from operating activities as a measure of
liquidity, as they do not consider certain cash requirements such as interest payments and tax
payments.
Preliminary Reconciliation of Net Income to EBITDA and Adjusted
EBITDA
29
$ in millions Three months ended
December 31,
Year Ended December 31,
2016 2015 2016 2015
Net income (loss) $ (14.0) $ 78.2 $ (20.5) $ 111.3
Provision for income taxes 6.6 16.9 15.6 45.6
Interest expense, net 32.1 5.1 84.2 32.9
Depreciation of revenue earning equipment 95.4 86.1 350.5 343.7
Non-rental depreciation and amortization 11.9 19.1 44.8 77.2
EBITDA 132.0 205.4 474.6 610.7
Restructuring charges 0.5 0.8 4.0 4.3
Restructuring related charges 1 - 1.4 2.9 8.0
Spin-off costs 11.5 6.1 49.2 25.8
Non-cash stock-based compensation charges 1.7 0.4 5.5 2.7
Gain on disposal of business - (50.9) - (50.9)
Other - 0.6 - -
Adjusted EBITDA $ 145.7 $ 163.8 $ 536.2 $ 600.6
Total Revenues $ 405.2 $422.4 $ 1,554.8 $ 1,678.2
Adjusted EBITDA $ 145.7 $ 163.8 $ 536.2 $ 600.6
Adjusted EBITDA Margin 36.0% 38.8% 34.5% 35.8%
NYSE: HRI
1 Represents incremental costs incurred directly supporting restructuring initiatives.
30
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 Currency
Translation
Year Ended
December 31, 2015
Adjusted
Total revenues $ 1,678.2 $ (69.8) $ 0 $1,608.4
Equipment rental revenue 1,411.7 (59.6) 0 1,352.1
$ in millions
Three months ended
December 31, 2016
Actual
Sale of France and
Spain
Foreign Currency
Translation
Three months ended
December 31, 2016
Adjusted
Total revenues $ 405.2 $ 0 $ 0.5 $ 405.7
Equipment rental revenue 356.7 0 0.5 357.2
Three months ended
December 31, 2015
Actual
Sale of France and
Spain
Foreign Currency
Translation
Three months ended
December 31, 2015
Adjusted
Total revenues $ 422.4 $ (9.9) $ 0 $412.5
Equipment rental revenue 359.2 (6.5) 0 352.7
$ in millions
$ in millions
$ in millions
$ in millions
Preliminary Reconciliation to Adjust for Divestitures and Foreign
Currency Translation
NYSE: HRI
Reconciliation of Free Cash Flow
31NYSE: HRI
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 of this measure may
not be comparable to similarly titled measures reported by other companies.
Free cash flow represents net cash provided by (used in) operating activities less revenue
earning equipment expenditures, proceeds from disposal of revenue earning equipment, property
and equipment expenditures, proceeds from disposal of property and equipment and other
investing activities. Free cash flow is used by management in analyzing the Company’s ability to
service and repay its debt and to forecast future periods. However, this measure does not
represent funds available for investment or other discretionary uses since it does not deduct cash
used to service debt or for other non-discretionary expenditures.
Preliminary Reconciliation of Free Cash Flow
32
$ in millions Year Ended
December 31,
2016
Net cash provided by operating activities $ 449.7
Revenue earning equipment expenditures ( (468.3)
Proceeds from disposal of revenue earning equipment 115.4
Non-rental capital expenditures (47.8)
Proceeds from disposal of property and equipment 5.7
Other investing activities (3.4)
Free Cash Flow $ 51.3
NYSE: HRI
33NYSE: HRI