HRI - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, Welcome to the Herc Holdings Inc.

First Quarter 2020 Earnings Conference Call. All participant will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note this event is being recorded.

to of conference Investor like Higashi, to now President Vice Relations. would turn over the Elizabeth I Please go ahead.

Elizabeth Higashi

quarter call. Thank you. your Welcome first morning. joining families us earnings And thank well. you everyone all are safe to you all hope We for and this XXXX and conference our

XX-Q, Center presentation call Earlier page filed of and technology on were remote Disease access. Prevention slides and Guidelines, and We’re conducting posted Web for distancing use today's using our of site the release, press today, and following the SEC all the Control both social IR with ir.hercrentals.com. our for at are events the

Irion, Larry be We’ll industry Aaron morning, Vice prepared Operating and quarter, President the joined by Chief Mark and remarks The will and Chief first an the Q&A. Birnbaum, Vice Financial Chief by Silber, Senior This review our President Officer. Senior our Officer; Executive view and outlook. open I'm and followed strategic President Officer;

over are Before the Larry, few to like I cover. call items I'd turn to there

our materially will conference statements uncertainties. we as results on are statements on based and today's statements. you These differ forward-looking this include environment First, it caution that would involve could risks the today I from therefore, and these see forward-looking call. actual made call

Slide December ended section our year annual of to for our Form well Factors Risk for complete XXXX. the the refer X Please presentation as report of the Safe Harbor as statement, XX, XX-K on

non-GAAP closest can operating in performance. conference non-GAAP to evaluating company's useful that for call is a found basis, these we in addition GAAP we will In financial information be measures be GAAP discussing results the the on the presented the material. equivalent to Reconciliations believe

dial-in instructions included call can replay or morning. Replay on our webcast of via a our in were earnings Finally, this Web site. through release accessed be our this

recording transcribing any given the call. not have for sanction any and permission of approve not call or of other this We do

Larry. to over the turn I'll now call

Larry Silber

Thank late It's began Elizabeth. relatively us for that start And the this was wave morning. on The disruptions you, volumes. for expected and solid quarter rent major seasonal pricing all as our March, metropolitan volume a joining quite activity XXXX. related been with thank moving after you Then to in significant by in of wave patterns. impact on COVID-XX markets typical impacted has rental in business and

industry. downturn While has is in call the XX experience of economic unlike have any than rental of more the on us of velocity ever leadership anything the years team on average senior experienced, equipment the this

in this that demand. recessions impacted other environment. events We've conditions our the to we're and been changing be place business very putting through customers equipment had turnaround. experienced several in markets The And rental everyone, quickly, optimally positioned temporarily taking we unexpected the to to end in fast has our intend recession to our When we playbook and while on impact pandemic steps order. recover, surprised assist manage react short

communities. the precautions to And health communicated our foremost, implemented the on of our our our customers and virus pandemic spreading. of to and team, safety onset we focus was actions COVID-XX reaction First the prevent the from take and the to quickly and

the essential some group of resilient which results. our mitigate equipment impact business help diverse COVID-XX business of rent a have on should and and diversity and industries, of We customers pandemic That many model a to services. provide the business of critical

impact the in rapidly worked adjusted the and leadership to into quickly market, of business to consideration seeing we potential take evaluate developing pandemic. the Our were team our trends the

to cover in adjust we detail changing net the have evaluating activities. Aaron environment, we steps business and steps to taken took expenditures. our capital cut In variable costs the will

call. will discuss assess an increasingly on developed our challenging to manage to assumptions ability scenarios also Mark our We various environment. in later downside those

managing prudently even balance ample the are are most difficult liquidity operations with our environment. and our in leverage modest to well-placed sheet sustain and We

of we’ll important management customers capital operate an strategy, in our disciplined environment. efficiently and is support continue this to as approach uncertain and Our our element necessary make to adjustments

turn across in and all recommendations work Now in Number as to the our washing, control travel We We X. infection implemented distancing of hand communications. restricted the Slide touching re-enforced and avoidance please as CDC operations well your social face, and non-essential regarding implemented and and to self of of home essential at of additional and and remote stepped equipment. March. quarantining, office operations up materials, in our put work for procedures policies staff cleaning returned cleaning protective and in for branch disinfectants. XX% moved early We sick We place procurement individuals gear frequent

are measures for CDC protective employees customers. screening with monitoring instituting following with and recommendations employees to and now We directly interacting respect

And at while I'm operational have our and we environment, safety days. been to regions XX% have operating reported least and a challenging our say all in enhanced procedures happy of perfect

our of attitude work, Before for in this of time of of essential to navigate the their team together. our customers results, proud and I of the critical team challenging begin our we challenging and want I communities to can-do all supporting together the this discussion as work I'm members thank environment. our work

safety our our We and The remain remain construction we our continue ready and customers. support while customers to priority, to can provide our our equipment by required whatever highest business in and this health communities when time, operations resume. and and team services uncertain our and of the we capacity customers' especially activities

fund achieved despite better cash to X. our we flows disruption to liquidity started And through related performance We're generate operating continued again. improved first please in efficiencies. pricing positioned pleased and with flow quarter ample to our are XXXX. well that with in Slide in needs mid-March. We the operational Now strong Number the from COVID-XX We turn excellent business once

sales please lower of $X.X to per X net revenue first a and million quarter used $XXX.X rental Now or to X.X% million loss of share grew equipment turn retail revenue or reported of declined Number $X.XX in Adjusted our We XX% million first results. quarter first diluted over million. diluted to for brief share a financial Slide lower our $XXX.X Equipment XXXX, in overview $X.X success to per Total due reflecting an year's in year. initiatives. of X.X% was which net quarter, the the million first cost was $X.X margin $XXX.X XX.X% for loss from Adjusted basis EBITDA the in improvement XXXX. or control to the increased million last quarter, prior EBITDA improvement of point activity. XXX

quarter to and up to going here performance to our operating I'm current Aaron discuss environment. the first Aaron? Now pick ask from

Aaron Birnbaum

Thank you, Larry.

has I'd to the what the exhibiting environment. rental they're our activity. beginning begin today, seasonal a is I for also Before uptick like and our throughout been the of shock thank typically professionalism dedication new team COVID-XX This members discussion our to in this

have every support I line support. provided are fleet and organization our serving managers, continuing also our to front what thank and customers. teams meeting procurement the want staff, know the branch our are and they to we on day workers and make anticipating like live call customers they all counter They of our field Our to needs truck and sure our tremendous drivers, deliver yard safety and want service, of mechanics been they we operations sales us. while appreciated by as

municipalities directives results. Please in Now on entertainment our impact on starting place had our in quarter turn to an urban were or first construction to cities, to move limit X. states as non-essential events by sporting business Slide Film immediate canceled. of businesses. let's and major festivals a operating discussion closed few and music Shelter mid-March. postponed In down sites were began and activity productions, TV

take activities our the stop who midstream to on and transportation worked down, consider should the immediately equipment secure, are enabled rent. start make forced but off them if rent peaked to wanted the customer on was off handle possible with equipment This OEC took to it once Our customers in how renting we Where returns. easier to site rent. mid-March. to they We assist help us left activity fleet keep costs to it

rental our rental volume at and monitoring closely all are our branches. of We activity

lessening have staff branch a hours by and adjustments We our branch are experienced on assessment. demand making to

volume reduced hours, activity, trends a hours these month About employees. if rotating XX% We certain regularly take and action our additional off trends, our rental or week days affecting reduction XX% either are taking we'll staff one metrics. a of in week fleet and through transaction rental branches monitor reviewing We half have other utilization key branch one about of closely necessary. or to two revenue

our We benefits of for are experience furlough as maintaining members we and all value their team and health welfare expertise.

our Please million about and approximately turn to solutions pro as XXXX. XX% fleet, fleet includes of or post total contract Slide Specialty of the QX for X. of of accounts now OEC end $XXX

trucks Our broken earth-moving slide. handling fleet trailers on of and material are the also core out and aerial

March. prior COVID-XX OEC at about year's Our quarter, market began The in impacts late million the quarter. were fleet flat in $XXX the expenditures first with

purchase way immediately well up back canceling were and the We expenditure in cycle. we show So QX. on QX will orders and our normal deliveries. on into responded QX cutting capital These adjustments by

were disposals million, $XXX we million year. the substantially lower $XXX of than last OEC sold OEC

down CapEx end with tighten resale the Our selling the replacement requirements. down to of to We're in shutting up. Then quarter with were as fleet. less quarter, okay our the of strategy minimize part beginning of disposal channel in the markets the started

economic we young ready. out as year push you couldn't and occur even equipment see is bit sales sales fleet We Our keep rental more a possibly that sweat fleet to the could hope enough next maintenance normal can bit, fleet a we age and more we activities. used the until

XX% place. of sold COVID-XX in year to slowdown. XX is We of March our last down first flat of appendix. manage economic late bit our fleet period year. total the break through auction while in with the same us most the channels rolling months, from Average March balance of a age age out fleet fleet through quarterly this also room in as a for due prior our information started XXXX our as sheltering of to we of of approximately along this markets fleet plenty XX, auction A in There's was quarter, induced the tightening with

Please turn XX. Slide to

many of on diverse business business, customers the and in a the for We our operating opportunities ground looking essential for our are communities. support locations Most have with team to large of national open our accounts is mix our customer sectors.

Other rental on of XX%. and of the and customers Our customer slide. side customers for chart the the government with revenue by shown represented followed infrastructure segment represented total. of XXXX left increased by industrial XX% revenue, the composition in is equipment rental Contractors major XX% XX%

with rental revenue account total of revenue. about for of XX% represented total XX% representing rental National local revenue the now QX

accounts COVID-XX in strategic and slowdown advantage national This customers, energy, and for include and has a primarily agriculture. they healthcare essential businesses lot utilities Our resilient more segment Herc. are key such the been a as as considered major business is of industrial

XX% of local, first is Our revenue ongoing state work as for in accounted and about the rental government projects infrastructure and for and noted, quarter. federal

We're and temporary also private the and public and health safety through and responders containment initiatives climate wall control, of supporting generators, lighting. rental power structures

staying environment. is focused difficult organization sales a Our in

Our sales services include activities focused warehousing essential in industrial businesses are and and that sectors services, are emergency manufacturing, continuing the efforts These within government such distribution, as directives. on the place healthcare, near-term shelter contractors.

business our in customers despite time a relationship is virtual focused Ours organization sales phone in our is solutions the and or shelter face mandates. be with on calls, place staying it and touch

entire Our that Mark. communities. the to and an now customers serving call the ensure our safely we we continue outstanding job doing is and intend needs onto efficiently team of pass to I'll while and operate

Mark Irion

driven our and Slide fiscal morning everyone. a of rate summary good improvements volume by have XX, that on in the results, rent. On Aaron, Thanks quarter offset XXXX we slowdown financial

the impact slides. not only what discussion do of of This weeks COVID-XX months reflect impact last the the for into of significant consistent in the expectations and couple COVID-XX in on fully a couple to are of seeing the and shelter impact so with the our quarterly our place quarter, we will the quarter on have provide the last in initiatives volumes. growth we induced similar felt going years. rental couple April were few more began on mid-March in first Then a trajectory The of year some results a was in

included already $XXX.X of million in to net $XXX.X sales covered. revenues Total XXXX. in Equipment of with Adjusted increased $X.X $X.XX year. non-GAAP first primarily loss details due which equipment, X.X% quarter More share appendix. rental $XXX.X net diluted or are rental to bridge last in lower per compared was income revenue net income quarter and diluted million, our $X.X to $X.X has the first the regarding of Aaron to million million million share our the reconciliations declined per the

EBITDA over or EBITDA XX.X% first Adjusted XXXX. first $XXX.X XXXX in margin year-over-year period million to in million Adjusted to in of quarter. increased improved the XXX the the points quarter X.X% same $X.X basis

We absolute in quarter reported SG&A XXX.X%, in terms benefited progress DOE. from and flow-through. reflected of which year-over-year REBITDA lower The of excellent flow-through first reductions

cost on Our a has focus growth, of amount growth initiatives into tune CapEx free cash growth amount self help revenue helped of rate and and a flow. descent EBITDA rental small

by result, margin a the first during this record we REBITDA for XXX basis year to grew As quarter points Herc. a of XX.X%

we XX, latest utilization. left The the our and dollar our on quarter with on year-over-year Slide upper pricing the up over On illustrates X.X% last year. highlight progress pricing graph

Our rent. a gas off rate shutdown stopped of like pricing oil most continued Certain initial a of in is are slowdown for in in rates. concessions. these job numbers, impact volume. we type that and Demand good The effectively slowdown is gear the improvement first not came But environment. date of the for of impact negotiation work cyclical part in are also the COVID-XX got apparent which the the caught yet wasn’t volume another was in shutdown the and impact initial The quarter clear. is rate was so related, and quarter, the still COVID-XX different slightly to generated really not looking it segments or part,

slide the year. the chart X.X% The shows fleet over on of quarter was top last in see the we that right average up

shelter became apparent. that most were to are initiatives and looking by yards, expenditure in we scheduled CapEx to then a of XXXX half We and on place net Aaron in of on our front delivered normal mid-March reduce amount our Since when As descent capital CapEx. typically which mentioned, our is QX. post-April, impact cadence CapEx kept being with CapEx around the we’ve economic track had somewhere was to of XXXX all pre-COVID, QX loaded

of first and back fleet was solid impact began in which quarter. historic the increase slowdown, during XX half The on X% volume initial shows dollar in was the the comparison XXXX, with first prior reached basis of of over XXXX volume to year. utilization or rental quarter an high pre-COVID-XX, trade points bottom quarter the on Despite a prior average compared chart to right detail for negatively year the rent first the COVID-XX an March. XX.X%, of Rental the

down adjusted or higher million, The of in equipment million up XX the compared Despite related reductions primarily on for growth an quarter XXXX, in rental chart quarter revenues, adjusted for direct reductions operating the million was by costs delivery to $XXX.X shows waterfall The $X.X over facilities increase of to strategic increased EBITDA in costs. and X.X% rental million quarter EBITDA XXXX. partially Slide offset expenses quarter the in and first with $X.X was revenue, the These personnel personnel $X.X were first due of freight prior first costs. $XXX.X starts and first million year.

reserves. in Both X.X% fees were declined to bad and significantly. related increase expense expenses debt an savings professional we by SG&A $XX.X reduced offset higher personnel as million

we the a all with As from We this business as focus measures and sales you industry excludes parts varying impact REBITDA it the equipment, our of be like without better rental core supplies. should impact as aware our on policies. contribution peers the depreciation by of REBITDA believe to provides of comparison now,

manner. and field our their the and like in improved XX.X%. REBITDA results, in and results a improvement thank our deliver seamless support margin and here the to improvement our drove year-over-year Aaron out point contributions contribution team cash reduction The take to little it’s to margin through quarter initiatives. to REBITDA flow combination team XXX but in a we basis rental timely getting solid thanked to operating has ops Overall of for a revenues time I'd of on a XXX.X% and the expenses to these continue

without couple office in and remain seamlessly back we office thanks We customers. a are white service at effective and HR branches much short finance Our of the to went home working And of providing pretty efforts days from it hitch. pulled to working IT, glove off with productive notice. our and a and to and teams,

turn to Slide XX. Please

was XXXX, free quarter flow For March cash million. XX, $XX.X the ended

cash times to range and equipment. targeted on year This and flow of times quarter’s impacted free disposals Net ago, lower decreased payment interest to compared solidly X.X with within our rental by timing X.X an notes X.X a and of times our are the of leverage BX plus. B was ratings our solid credit X.X a

to of prior as of near-term the result the debt Total with through facility notes sheet took and no was year $X.X challenges last maturities the as actions XX, ABL last navigate as balance the well positioned about us. same we XXXX, a to have us summer. the of senior and refinancing refinance credit of The billion March our year ahead

material the is on no the notes or have below be covenants tested covenant on senior and to ABL no until XX% material availability We million. $XXX

of liquidity over million. securitization of on and credit ABL $XX.X cash million March of our cash million facility AR as our XX, ample with equivalents had and on We XXXX, one $XXX.X $XXX.X billion comprised $X.X of

model of Our current open to the should cash of economy our projections up business cash we the able is we've the And result on a of flow in to in CapEx for made as and year. the XXXX is be reducing generate a consumer adjustments free fleet variable the and are resilient. back significant half not expenses,

to How On are GDP changed we quarter Many impact have of forecasting this X%. from have consensus some XX% from things for discuss Slide second call. in further year. our XX, to-date. down which seen economists some Construction be could quarter year, with could COVID-XX quickly the last X% but now quarters anywhere down Such recovery team fluid forecast, fourth the and the third week. is last and been week to could XX% The veterans forecasts be compared closures country XXXX over The workers. have the either or starts the and lack implemented with the Herc facts down of rapidly seasoned from XX% X% be non-residential rapidly Luckily, XXXX. has last is a construction by with leadership or slowed recovery in industry to across in so. of changed playbook situation month has site costs cycle GDP down

how business shows XX been to-date. has impacted Slide our

and With down far here out of experienced your and what for will April of the you trending impact rental in extrapolate by can April in rental time, versus short potentially volumes XX% to based could on XX% remainder we a of fast assessment to so April revenues we've to on year. prior which so approximately have negative XX% prior are situation so the year. developing the discuss year, XX% comparison

fully The entertainment services accounts the national and central it event has resilient hard shutting with business and was business more The heavier business particularly some has towards been our sheltered hit down. temporary the North sitting studios of facilities. in impact as actively business in This weighted facilities be healthcare involved specialty part and the America. up a testing to extent are of looks the

volumes some recently the We that has be least decline have seen the reduced bottoming signs of significantly. right out. positive decline At might of

daily including at will length closures costs, highly the We dramatically monitor cetera. We've labor expenses, determine the of believe actions our which remains free on overtime, XXXX adjust uncertain. outside immediate the a rent, et locations, transportation variable the We and hourly that impacted results, activity cut taken on basis accordingly. to severity impact of

and costs, intact. core focus maintaining is out our Our team taking while on external

all the not are and significant healthcare current in the environment layoffs are benefits. We maintaining anticipating

Our Herc and focus customers. is our on team

our will and opportunities team to crisis and be to customers communities. coming of out in invested service intact rental our our team We have and respond this

EBITDA extent, able tough have amount the generate the impact cost We an to and REBITDA that XX% manage be Emphasis on volumes. to be the savings margins our fixed margins impact cost good to equipment business we will a in There times. limits communicate sales in from certain decremental the margins as we current range here the our XX% have conditions. we a will of in should of have despite We lower flow implemented. in to an REBITDA model of amount cost times

could able half in taken XXXX. our discussed, reduce by with flow. down of expenditures scenario with of XXXX what and free net to spent number end to consume XX% should rental the cash to As CapEx this revenues unlikely be to year for somewhere we Even actions around we've cash to substantially XX% we a capital still reduce months, in and are positive

of future business we our withdrawing Given American our COVID-XX are activity and uncertainty North guidance. on the impact of the specifically, XXXX business

beginning of which presentation, our as us mission focused the vision, this At same these challenges How statements through shows guide These in and priorities pyramid, us challenging we and on manage as slide times our as good the individuals. and times. values. business Larry define the will on leaders company a as

stronger. now choice to committed Herc and this making and And to of back to pass the are the supplier better Larry. investment emerge intend employer, call We I'll from we challenge and

Larry Silber

Mark. you, Thank

Before will this communities we our we that to purpose safe to a equip to We our today. committed go this team Throughout Q&A, I'd brighter environment summarize support environment. to customers to customers stick where a dedicated in intend build in we like healthy our challenging a with to is and are challenging and period, that is and and future.

executed committed out been well. Our has and laid is and this four resilient changing swift we strategy We business response to our believe ago. model years the environment to we're

requirements. have steps capital reduce costs We and to taken cut

We term and stated have solid through to value We're near execution, intend no solid and shareholders, maturities. with employees a in ample to balance sticking the our sheet we our long-term. for and improve customers goals liquidity

open lines. please the operator questions, your for now And

Operator

the begin will [Operator session Instructions]. We question-and-answer

Our ahead. first Goldman Sachs. Jerry Revich is from question from Go

Jerry Revich

expand a the you pricing prepared that folks in we Can the on made more remarks. little comments bit

update just your market in that relative out impacted, will? are to you be of just on there end concessions you other of could oil magnitude your the markets. coming price Can business on and how some mentioned and proportion gas what do if us expand to order play you and You expect

Larry Silber

a the situation on business Typically, pricing lot downstream. the something in of pricing whole upstream of impact that’s the mean of business, than and upstream But low-single gas also fluid given in our and totaled that's magnitude sort carry the place Oil I and and give digits oil about. that X%. to taking of is we're very on. hot that conversations is which say of see just and talking terms sort digit mid-single downstream gas, less we low-teens this a

give customer customer, there As by something not even something us terms got case-by-case is that so you, can we’ve clarity that really we not it's it's of that directly. how in impacts

to I think happy we'd out be it’s the with pricing play still have of and of early quarter we've to of the rest but get kind days flat the quarter out.

Jerry Revich

terms the And for folks? outlook don't we the of at think utilization flow are if CapEx long least as be investing comments. had this of about then type to in decline as next CapEx think where this we folks financials in essentially Are free business… areas fleet Should in you available because any cash I have going you zero will there

Larry Silber

still CapEx the year CapEx in So be And in some positive for a pockets there. positive is that special we're spending some business of and amount of business that we every giving is the month. a direction business, slowed have are out. specialty there about XXXX, that's have opportunities still the still we the small half will so of There

of no somewhere see be And small last that dramatically CapEx will of happens it year. we the as half matter around there’s is, but what spent I environment amount So in it what a reduced.

Jerry Revich

reduce if to just you I it that flush flow of And like Mark, enable structure able what to out so the you operating I'm to implies, and back costs correct pretty and sales were us decline terms looks of you're wrong, XX% that scale of call that the of just encouraging to Can talk cut comments for what maybe lastly parts margins. about significantly? through you're able decremental XX% costs, cost in the XX% of

Mark Irion

had volume playbook experienced a fast, dramatic We've taken We've out locations certain seeing effectively are been Outside it's that So a key couple quickly. adjusted of an at This it's so drop. busy weeks. in sort happened really we've Hauler, the team. of the wages business. hourly all of those notes

there So wages. there's of cost a our savings in terms

We healthcare environment, we have this think focus very support, that throughout, in we're maintained to that's continuing appropriate so overtime. costs re-rent that's something on

to of costs consultants that expenses the just payroll internal anything and variable we that able outside sort any out But as we've adjustment of just and much we'd leaving to taken or costs in business. of about sort an to can. being make we've So of we've our gotten looked there sort to into expenses, outside like terms as cap maintain and been

Operator

next question Bank America. Gilardi ahead. from Our is from Ross Go of

Ross Gilardi

mix, XX% little bit? gap of can But April XX% in the if could that Is it's glad are you total guys was down with maybe a to can amount to mentioned XX% on best business on or just Larry, of you XX%. or the pricing I'm bridge hear Mark I revenues difference decline or to fleet environment. through the okay and you this doing wondering us both? rent you can you elaborate you the in help

Larry Silber

AGS said, terms for I at some of is a instance the on mostly business we on impact coming small sort pricing and there's completely that really like mix mapped volume. does having premium. business So It's volume different month and The but ratio out that a entertainment it's got in haven't rental mix up the slightly of revenues. a price of of And to volume.

Ross Gilardi

I And down suggesting down that you declines you greater curious XX% XX% was to that and comment out. on initially rent about bottomed fleet think a that in by amount, the Are the was here I XX% mean now I like than as Or to less XX% sit day… day it's realize today? XX%? you we to something XX% down are rating only is to run this down

Larry Silber

that we rent things and for I that coming holding it's off been think metropolitan talked major that at weeks. initially now level and couple started the of trailing XX% to we XX% with markets, out about been in

and and hit several we bottom, which positive direction. up in its months businesses as why we can next optimistic near we we a at customers point say open that's impact in the think that somewhat the we're So and a or over may that weeks that

Ross Gilardi

to but material to any assuming you degradation, And totally rental have understand clarify another, team, XX range goes that wanted XXs utilization reasons when point to these kind of sitting price business, any if assumes on the pricing of event for a members maybe even term, that the where potentially into the do mentioned mid more at I'm to this margin or that something as here what I low And point, in how a have starts that Like with more the or that don't if industry versus believe the for that changes this getting the just I environment to immediate difficult thoughts below decremental which midsummer, you pricing pressure? blink? you any timing on is does that pricing to like get think at that. long something conversation remains do you're severe Larry, time just or the

Larry Silber

So the XX% not of happens statements pure to two what that to an is decline affected pricing as Like are modest way speculation in material. a as was that sort dramatic There on out. number. assumption of but have I certain premium say it's And been things. XX% price mentioned, not you

get environment. that shut same of feed just on they quickly price, a midst the and of open balance work a a So out more pricing sort opportunity it's back for would that just creeping then a demand of roll would say more think negative down, that things gives in supply might up of if I pretty to way slow the rents it's negotiations that and and price that get

Mark Irion

Remember, going to and we fortunate the generate is and expect that is to generally demand our coming past we enough reliability out into continue going with them. been continue to we've in that this demand try would that the that And it. and pricing to structure customers our the supply service you to of provide we'll are valuing can't what be had we Demand maintain need pricing.

Ross Gilardi

one or Just year kind a to just the comment saying generation, downturn. mean CapEx free downturn, kind I whether why of given little sizable cash but like a is I bit? what you it flow know dunk on slam wrong, side that it you're reductions I on one comfortably is restructuring I variables a to cash last the Or the I'll if free pretty heard bit cash be wanted little that sounded be charges a is expect I would a generation you very the elaborate ask have you're cost the be over, but don't wouldn't flow. cash it tentative, are that of company take? a would cash unique think to that positive cost that not this I on what this free this understand be and positive you're free essentially significant and going year? and positive matter to very of the a of considering, And turn free given you Can the fit doing

Larry Silber

we dunks of lot I there's a where not there just out slam mean today. sit

the shutdown the So place we're in long and is. variability sheltering just what extent is of how the

the whole the Assuming drag on that becoming in this and is shutdown little yes, of a challenging a But then summer months scenario. of flow if bit couple the should we starts of be for year a start was more we up this positive. that then free opening

Mark Irion

tightened that, equipment would I up. has add the market And Ross, to used

from not going sale generating fleet a variable. equipment, we're aging so cash. and generates selling it which We're our of which to the used equipment, is to bit be not be cash another And going sweating

Ross Gilardi

here… a used obviously Slam term, dunk sorry I’m was inappropriate I that so a lot

Operator

from ahead. Rob Melius Wertheimer Our Research. is question Go from next

Rob Wertheimer

I down. maybe much, and on understand clarity ask how it helpful the mean for just obviously in variation thanks end market. very an wide can know uncertain so there it's I is to in So but If more a far things I world April, are bit

So to or true have parts was Coast know of government declines state actual I the if in bottom versus an like kind the on the versus and that's don't you infrastructure that of… down any California not XX, were on contracted being. on take shutdown if East that you your or color

Aaron Birnbaum

usual, sectors still do very infrastructure have lot the of a performing that are government We sectors performing are as well.

at have and And governors look tends markets place. is independent rural actions, geography, performing lot put the a an home specialty to then be And when it is markets we As mentioned, urban business stay the has at actions that in our well. the less severity the of have more impact. of upon you really the then

there for in some sure So variations there is network. our entire out

Rob Wertheimer

early don't and slowdown have and or down should the that a forward if knows. industry right do, And may sales thing in just allowing shrinking do you you When do. it's at then you consider you fleet I the talk What fleet. two who out you indicators, environment. maybe and the is in the you be Larry, a down it just about to the think to right construction I for aging Could fleet the look sort sweating this we that about know some understand uncertain of very maybe year a for shrinking for

Larry Silber

we the point at of that. There the wholesale the At natural branches. some equipment will the really to out sales on of on some used retail where the but branches focus activity not be considering we're going of moment, of attrition fleet auction out or a aren't we're really

COVID months the costs going additional We this fleet. without over fleet of year, and the couple next R&M age too Our the we much year on a on period. R&M, age fleet half. into XX age this is about percent to can can pick mid-XXs And easily up

I don't grow and year. at is were go our industry don't some I unless fleet think this up planning We dry moment. absolutely see But to at fleet shrinking moment, modestly away, our us the the

to the We this have XX year. a branch to number have earlier we going openings year said we're six in

capital consume markets. move those for of new and fleet instead into in fleet, buying can, we capital that those So around locations that

Operator

from next is question from Brian Our Gabelli ahead. Sponheimer Go Funds.

Brian Sponheimer

the call. just everybody I My best on else and one have that's also question. of to to you all

an fleet what Does of putting asked. part to work and rent basis? this you been kind any permanent look relief have quantify could be might support a temporary effort. this you could of in for be that what there’s maybe lot a annual of as like think like seem that sort ones on it good I typically thought of would But are been of that

Aaron Birnbaum

of up Central of some on in a the of part even specifically Seaboard West geographies Eastern the in drive quite testing been activity pop the down activity There's business, and tents, the federal our tents bit it's what different South with military thru Coast. government, we the lot on across country a call the and and healthcare hospital,

as put being still now. place, as And far So how in it's a put lot that long it'll be place even in know. of right hard to

rest Some the year. are being for be it'll of advised the

Some lot last. in how of but don't that place, activity there really of is absolutely. hey, it know segment define that we is how long clearly can't But a in long, it just, might

Brian Sponheimer

if are to, when seeing as a what the and dispose see potentially, as traffic that a outlet to foot as use And from you far able perspective of sign markets an to auction you wanted you be just there equipment? to

Larry Silber

when and open I a it’s on the that will be, together, companies ground all going that's related you of sporting gathered today. event, of to think people Right and auction lots up. now, activity. close auction of on people live lots location, And major dominant of lifting is think We no thousands It'll the I events I with different auction online when of reverted activities think a to got frenzied sporting than the Brian. a gathering a of type be have activities in activity see the

to of saw we terms the for we We new reducing So and And this or so with fleet comfortable as aging towards aging we with is back when XX% as to last and point to as it changed for end us. years. of the type we itself. Major we have the in been the XX%, in gear. the below we probably at auction the online wanted knew not and our stadiums. where up March, it. fleet of age a I to be much think they're we're would might live mindset of some working and akin again what obviously, expected over is Look, activity comfortable five degradation attractive in four not to maybe in the returns comes League we moment, our people and Baseball activity And And experience expense CapEx probably got to in we're can do have putting cut going where age

Brian Sponheimer

thinking talk I about this one me, last to proposition just would shift as just you to customers guess this your imagine a competitors term, potentially longer a for looking I value end from just at Can share, some potentially you rent the show you that And secular gaining not to where are way only your that? but more also about of up own. could versus

Larry Silber

until trepid capital, in like it'll environment. about out investing have economic of coming and they're today you we anytime shift. customers naturally more we'll and rental. shift to When in the And to be are little certainty ownership terms future, think I of environment more see a get this a going regular the create in that there's terms work, have uncertainty I the expect of we'll a think certainly economic in

will safe I in versus support customer the And we're of channel an think fallout revert that survive traditionally a mom to alternative and or that smaller pops to share and those of and our more and operating sort and those operating healthy don't have gone that is type environment. where the are the we'll providing around probably up may around way competitors this. pick customers

Operator

Go from Steven question Thompson. next is from ahead. Our Ramsey

Steven Ramsey

it metro clustering magnified the things of out an gives headwind local metro around near-term versus guess areas from A up in how the customers strategy? the the if is few clustering, centered clustering to flexibility areas. questions maybe in guess, is around customers strategy I push with the near-term. once I any guess talking since start the accelerated and because down you sooner, maybe that aligns there this clustering there pick where But I slowed that and of national naturally about then

Aaron Birnbaum

Steven, network, I our a have our in of strategy, say typically very, would in diverse urban very urban we fleet. amount

rural and urban in more All settings and non urban are in strategies degree our to of play at or less our those segment settings. a

they this think diversified that's very and in for of to customers. kind on. I we're activity you to be allowing So storm allowed setting, essential weather with most go very, remain urban us And products markets because to,

rapidly. accelerate say believe those May come I will that So through back, the more April, and once markets that let's to month gradually activity of starts

we a years. like of we've strategy deploying again, our been number for So

Steven Ramsey

local And of dichotomy local down just double drivers accounts versus rental maybe accounts down decline April on the then XX% of, revenue can and of maybe you declines? maybe national low I in range mean, the rental the a kind were digits. national volumes, discuss

Aaron Birnbaum

Steven, to that think much a and account customers business business little a too contracted don't revenue it bit which does the business's specific, local very services, has customers. resilient the is segment national not probably more has been obviously national biggest it the essential portion want more lot, than a on account so our than But local focused of get by I point. we of lot mix

Steven Ramsey

any holding Can what you talk you that at up of like talk about think resilience? flattish to, order resiliency. just Is mean or then about when magnitude you to by

Aaron Birnbaum

on up maybe X% the bigger it's the XX% taken of segments business is our and national slightly other account drop. so So book,

Steven Ramsey

collecting revenue in with receivables but on concern concern, any accounts. local there early tell, Is from survivability accounts? local And maybe or accounts conversations it's too to of local

Larry Silber

the of to are we're terms soon in a see of this challenging side. in it's middle in mean and Understandably environment. survivability, collections too thing lot So right I not visibility to other mean, I there's of this the

accounts the it local out office with some business of puts their of and Some their of pressure on it and flows. their been shutdown shut have cash

that anticipate So seen these be going through do we and have impacted this environment. collections a in slowdown to are

Operator

Weber RBC. from Go next Seth question is Our from ahead.

Seth Weber

just Or that? color on Thanks. any customers, you being questions Most for projects will mindset the been out? occurring. happen shed that projects having view canceled they this that or that that rather your with in are Aaron. being conversations not was been just But they maybe asked, just the these but postponed? delayed are discussions have Are around of my have you’ve these Can is projects getting

Larry Silber

don’t regular as is the the I this think back job of right into going pop on up. And if I strong June mean, and back to go solid. was get see sites very a people They regular, very know market we kind May I and word. through once markets work

a going does amount existing finish it more broke a here be sunshine to and look road of finish and pipeline and new the projects in little bit to hey, opening that were return I what with be once But volumes like see it'll future. we The a up. work near to ground up. the is, there's think projects think brisk already the I work that fair down surge that question with later hopefully on

Seth Weber

at some then you've as But And Herc this talk of represent the percentage the it this to how to does can if point? is? business, big out. of on revenue and what of broken there. kind entertainment your event I does you I business versus apologize What Thanks. the think other unique that out it's peers

Larry Silber

digit. it's mid-single like Yes,

Operator

from is next David Our from Evercore. question Russell

David Russell

On currently an is, you how work. idled shutdown to sense due just end with is it that assumption the uneven of percentage? your the temporarily of weaker economies sense demand immediate that you truly do however fleet Could the Well, government would reopen, gen rest percent the rent I'm that return side. is those assumption curious the give Can is jobs some of type were actions see of then the on what give us when me broadly. jobs?

Aaron Birnbaum

it's on right is now, about to a job site David, to go work. of idle ready X% fleet back our

David Russell

still turned immediately but the sitting are off they off, they jobs So from idle start are government, can just correct? reopened once payment those turned

Aaron Birnbaum

backup. Yes, to return we have agreement work the with starting our customers to post a rental

fleet will that work to back automatically go work. get they once to back So amount of

David Russell

there's with because on time cuts, of about of CapEx then percent a time how you fleet manage that X your those to assuming level cuts CapEx you would produce. obviously, fleet some gross with you kind said how give net, thought the you're some Can that framework size? with And us that assumption you net

Larry Silber

really it's mean, I No, not direct. that

are So cut kept hot specialty said, for still mind. like everything business to some we and just that except I the really costs in

in was of So flow free and our really preserving cash of just matter terms a flexibility cash. just chopping it presuming it back

with everything go to We've the manage back active to demand the that going but for was to come we other really the we'll have adjust out took just and of aren’t just through available backup, be rent on a as we it wasn't capability we stuff see that's lot and it. just as non-essential to off range So on fleet there's got considered slowdown. that side

David Russell

cut use assume we the Was it we the cash on flow focus size rental time rate. not relative was get this this CapEx on priority, should fleet focus and or implications at on

cash more So the fair… cuts were of a centric little is decision, flow a it

Larry Silber

focused way on out. Yes, the to was flexibility everything nonessential just maximize

Operator

now over like session. would to I turn remarks. the for This concludes closing Elizabeth to our Higashi question-and-answer conference

Elizabeth Higashi

to you of and further have later. all call. you well. And everyone. give you Stay to always any Thank if stay safe a feel free Bye-bye. questions, Talk as me please course

Operator

attending now is Thank conference The concluded. you presentation. for today's

disconnect. now You may

Herc (HRI) 23 Apr 202020 Q1 Earnings call transcript