HRI - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Herc Holdings Inc. Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Elizabeth Higashi. Please go ahead.

Elizabeth Higashi

thank for and morning. us Grant, you, you, joining all, this Thank to full and fourth XXXX Welcome quarter call. year our earnings conference our at ir.hercrentals.com. slides presentation the all press were on today, posted website with are SEC and IR our filed and Earlier XX-K release, Senior joined Mark Birnbaum, Irion, Officer. President Chief President morning, Senior Officer; I'm and Executive Operating Financial Larry Vice by This and President Chief Silber, Chief Aaron Vice and Officer; and and our review view industry We'll fourth of full quarter outlook. our year, strategic the and the The an prepared followed Q&A. open by remarks will be

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

statements conference Risk Please that made as X statements. These well we our the XX, differ XXXX. presentation materially for actual to today's statement I section complete forward-looking involve on ended statements of environment December XX-K Factors today as report of the will it uncertainties. Slide the therefore, as results and could on on safe First, annual include Form the see risks harbor call. from call our you the are caution year forward-looking and based refer this for our would

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

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

call. sanction to and permission any other the call do or over approve this I'll given of turn any call not have for now We transcribing of the Larry. not recording

Lawrence Silber

good Elizabeth, you, morning, and Thank everyone.

turn challenging team pandemic XXXX country scale will which a control under readily a team. everyone Hopefully, we available as rental on ample X,XXX I'd with years With the supports more and make on employees the variety COVID-XX the year wide of resources continues getting and a Slide industries. levels. efficiently history one to serving XXXX, and a for safely, like our with for companies X. of over customers range on our leading our both our in becoming capital North in focused most industry, a Rentals of to Rentals First equipment rental of effectively. communities, America of bit Rentals provide tremendous customers around and personal customers sight, our is are the and XX work-related efforts Please equipment all, brighter and the broad in their hope Herc the vaccines that Herc to Herc thank in

proactively year. Our increased when specialty the QX norm. to equipment revenue customers in XXXX rental industry weather-related to as ProSolutions assisted continued and expand in in rental events business this we declines XX% by revenues pandemic response the were

customer experienced offset with local strategic fleet slowdown business diversification offset stability parts helped the to and the of national COVID helping Our customer revenue. business the in accounts our to in certain declines of the we

our also and communities safety as strong for provides customers Our we priority customer-centric culture a serve team and our keep high foundation safe. and

X in X currently Canada As in of our the to were a strengths our evident excited states the Canadian and first public challenging recently XXXX, business new we this We across since organization ever. became than in locations States and are operating adjust announce provinces. Houston. United to company our acquisition and We more XXX multi-location environment, XX we operate and locations

the excited Rentals to are We family. add team to the Champion Herc

Now please turn to Slide X.

the continuing in demand pricing overcame volume as slowdown. the to expectations and of lower the quickly, prospect cost despite decline XXXX protective initiatives, deliver exceeding year up positive relating precautions and spin, full and record we outstanding in We equipment. the to a challenge despite results. achieving while equipment, disinfecting COVID-XX a results for demonstrated we diligence Since ended positive cost Our these social and wearing efficiencies we've to track COVID-revised related distancing growth safety savings on and our maintained by business personnel self-help organic solid responding new implementing have of extra been focused

of new balance and we our made As sheet well into liquidity last our metropolitan last locations addition of network by X fourth early our through of will the operating expenditures climb in growing more markets, our years, the in positioned quarter. free of efficiency increased to accelerate major impacts, million capital $X.X to We COVID-XX a to net over prudently generated reducing both significant cash now in $XXX managed utilization through industry of on the fleet to growth line we to And we forward accelerating top by economy the economic end by flow our growth. focus approximately be driving where and the continue our year. steps and branches. out look economy, billion We've and intend the improvements moving

and us approach, environment as Our to to normal a returns carefully our growth position business disciplined liquidity modest the cadence. ample leverage XXXX accelerate capital in

Now of please for X overview a turn to our full Slide financial year results. brief

we experienced normal declines quarter. show third the a percentage double-digit we the we to momentum While in in continued a continued and second cadence positive quarter, experience also seasonal from revenue rental to fourth

Irion year. the annual down spin-off, taking for our $X.XX positive compared continue best Equipment the EBITDA adjusted we continued our was gap expectations likes outside the fourth to X.X% stated say, up Mark adjusted the been close million. revenues revenue over with we then. year, trends back As and decline costs. XX.X% in third previously since in quarter. full managed year our And since band margin our higher to margin the industry at higher EBITDA the Adjusted of an $XXX.X successfully in took the a momentum full revenue, the than our of very show quarter have steps peers. prior We Volume billion ended the million rental for the the we delivered $XXX.X to EBITDA QX, to guidance elevator decline and for or year, despite the and

focus the continued initiatives contribute successfully on interest and also many of throughout we selling, savings line in introduced XXXX XXXX cost as administrative our to direct operating to continued costs that reduce Our to and were bottom general costs, expense.

of year result, a income full reported As net for we the per diluted $X.XX million share $XX.X XXXX. or

Chief pick our discuss fourth Now environment. Operating current Aaron to Birnbaum, I'm performance more operating to from our Aaron? detail to in and up going here Officer, ask quarter

Aaron Birnbaum

Larry. you, Thank

this as members. The company's start results, I with of say speak Herc. all team in operating job, the opportunity focus effectively Before our would customers discussion to and served year. want I execution our thank of challenging to I We to members, contributions team's greatly results a outstanding my each the great every and team like appreciate controlled take our We team expenses priority. to foremost our our and one of while safety and of

Now Slide please to turn X.

customer industry of full and diverse both COVID-XX the mitigate business geography, by impact helped Our base, slowdowns.

basis prior And the in to of rates fourth a previous in from in slight our full to momentum pandemic year compared hold the only up We points. for saw basis continued continued positive decline volume to we improvements trough our QX quarter, were the XXXX, Unlike rates just successfully downturns, we year. economic with to XX points steady XX see down QX. in rental actually

team rental fourth the our in both an performance prior emergency and the Solid ProSolutions' of year, response increase by by accelerated activity. XX% with revenue quarter aided over weather-related

our Now for please turn results. to safety Slide X

throughout remained of pandemic a open our this services, essential operations and serve provider core As support customers. to

safety and While service full new to our with during continued balancing safety and customer results of the health outstanding quarter standards, for the practicing deliver the team impact year.

that X.XX, been several declined declining see we years, over the on report the you from total left. ratio the Our rate, has incident a recordable as which chart can annually, to last

operations on no recordable perfect safety One and incidents, that motor training. safety no over branch-by-branch no In of a means violations. focus commitment days, branch major of our XX,XXX we XXXX, days of to stage in communications XXXX, is internal conducted on reported accidents A perfect. XX% with OSHA training. programs our and vehicle hours at-fault DOT And as safety continuous through focuses measurement,

annual hired, office require such all safety support including in settings, center go they Slide employees, New employees of those we of XX. and through field our when our are to program a as rigorous training safety turn call and Please centers.

across footprint strong new greenfield a to invest future growth investment America have and regions. our in openings the North fleet in high-growth We continue locations of through and

and our Champion us family. Rentals the strategy turn XX Please in we the Houston well, allowed to Denver Herc we between locations market. new grow new in the acquisition greenfield wanted to Dallas. At geographic in December, market we to and acquisition targeting area. in that to and XX metropolitan to locations was a welcome of Houston. end Fort and locations to do pleased desired locations and We Champion contractors X Toronto, Champion currently team continue Champion the XX. and are in into growth XXXX, Rentals' in in we The that high-growth urban new During locations going with implement we're customers planned filling and other footprint completed Lauderdale, intend Houston XXXX. markets faster, opened X industrial of the integration new Slide the the the of serve is

was focused million fourth in accounts our was demand $XXX shutdowns. under in slide, fourth used our off by for end where fleet XXXX, especially disposals side The includes continued to made were utilization a older, rental by XXXX core we million year's the OEC less million on $XXX to The of period. fleet reduction fleet is COVID-XX our about the in optimizing at of OEC age higher developing we Our during have the billion, With demand in OEC environment, average than now channels the of of in XXXX. $XXX months total ProSolutions of and we this in quarter. last XX% disposals pay was given the COVID-XX fleet OEC was the composition targeted the XX to QX specialty the as our pressure where left-hand and year. approximately of $X.XX equipment as comparable of X% have on business desirable total investments closer an By impacted fleet, fleet operating on ProContractor since year-end from businesses impacts quarter, this our reduced the of environment in in assets normal pandemic QX, sold the shutdowns.

QX in sales With the categories growth. average representing in in and Proceeds X% have of channel to in invest have we the with the and rightsized environment markets the fleet was to key wherever more XX% to the down current sold wholesale OEC. fleet we half were capital prior quarter. the and than year enough QX, by Approximately compared XXXX, through we fleet fourth channels fleet see of approximately opportunity auction, XX% of other an for retail our believe

for XXXX, the period XX, Our months. fleet XX was December age ending

please turn to XX. Now Slide

climb to in COVID-XX QX, which year's QX. last steps volume of back by our represents levels. the close continued a and out QX, volume down the rent We with during steady impact. of X% continued Rental momentum to was improvement in from rental OEC bottom gap fleet on positive And the

XX% have health general We with and manufacturing care, account in of operating include customers account and major energy, customer sectors. national many customers diverse a business These National essential and industrial more in fourth and account our mix customers representing revenue. They national have of warehousing Herc. the construction. large the utilities with COVID-XX now rental the been resilient total of a in a in about the local quarter, of revenue XX% slowdown rental strategic total key revenue represented lot advantage

for suggests but on to XXXX based ARA, all for the in North industry those expectations we forecast following intend We high-growth initiatives. strategy. as markets the and equipment on the our discuss are the as the normal our Please Mark segments flattish of focused to more end are times. return rental by opportunities XX. will outlined overall equipment America. rental the of economy expectations Current year, revenue further turn industry, to and outperform growth our We Slide by sticking in guidance to for see financial

the to our investing focus our a of on and training employees, for well-being by will communities. in customers operating safe continue environment We team and

I'll equipment plan and We aggressively premium to a on greenfield we through in utilization. existing improve continue more invest to focus and growth And our shall XX to and to improved and We the markets Mark. service urban branches drive fleet our plan customer cost of continue fleet to top lean to deliver expand line customers. network plan We to specialty will fast-growing in XX providing to growth. excellent by now to pass our to our We margins, structure drive remain businesses. on and committed We network investing call locations.

Mark Irion

morning, Thanks, everyone. Aaron, good and

Our than of business this demonstrate business industries to operating is resilient fourth that have many and a quarter that model in other environment. a results continued scale we challenging less volatile

pleased We are with considering whole the performance the in XXXX, our of challenges QX really and we for faced.

own exceeded QX. our end the we the provided results expectations Our guidance top in of and

Our of years last focus couple on improvement the paying margin over off. is

we the With Equipment how million at in year bad X% Slide summary and just and equipment advantage to range a shutdowns adjusted fleet. of XX our $XXX.X the income costs environment, declined in in quarter financial diluted to per X.X% rental we of Total COVID-XX million or some $X.XX remain of fourth margin with share margin in declined diluted on fourth the and by of period rental last EBITDA net XXXX of or our revenue, to X.X% of EBITDA to pleased our good the line, same top adjusted the and fourth primarily and revenue the were for quarter. points $XXX.X the the the rental in million XXXX. in Adjusted last in with already to equipment XXXX million being was increased $XX.X end in XXXX to revenue full by results. REBITDA quarter points Despite year. still X% margin the sales as a XX.X% was came XXXX, tightening COVID-XX $XXX.X able spin. of of in million on the profitable the lower was of basis we fourth a lower to $XX.X sales XXX declined managing in to shows the and market the XX.X% fourth third offset are since we million $XX.X equipment net compared decline $XXX used decrease of from quarter basis stabilization the guided challenges in or margin XXXX in primarily million quickly up year. XX that our for partially revenues than expenses in Despite in during by less rental million, quarter $XXX our X.X% quarter with focused million with year. the $XX.X of rental share Adjusted income quarter of of fourth rental increase declined $X.XX fourth lower place, in REBITDA this the the fourth due to to to XXXX. due took of quarter per XX.X% We compared the impact contribute REBITDA was accelerating decline, for of quarter adjust for improvement variable the initiatives the low-margin quarter. revenues other were best

we Slide excellent and result, consider during Our operations the XX.X%, which results REBITDA challenges the COVID-XX for our basis XXX with expanded down be XX, we latest upper XXXX utilization the to given by year to for highlight points. points The on of year. graph year-over-year the placed left margin the and by illustrates XX on reflecting full trends an quarter On basis quarter. pricing, the rates average our only pricing

for the COVID-XX decline are volumes. quite last managed rates we despite impact that the we As on we quarters discussed, pleased nominal rental with of in already dramatic the have X our

All the reflect XX our exceed improved managed rental the our now year. fourth fingertips excellent the quarter to rate is tools been on disciplined the utilization In previous continued XXXX. record downturn and of The discipline cycle coming professionalism results industry. the the industry, rate of in of for in basis XXXX, full have compared than that rates all, current price general, rental positive has we at far fact, positive last in into the and sales any maturity Herc XX.X% and downturns, thanks the to to Dollar momentum maintain determined XX.X% the we more team, in on in points. year to was team previous

a despite is XXX seasonality QX the in experienced shows fourth the average over that in we period chart the a year-over-year bit quarter environment improvement in QX comparable X% about also increase slight this increase top the on The normal meaningful a QX. sequential to a While of was from fleet points of win, right year. basis declined last the

reduced by created the fourth sales The year. With with Our in the XXXX on $X.X XX a shows closing year-end a chart on to have fleet now XXXX. quarter, fourth segments fleet rental at shutdowns. available and and to is the primarily expected improvement during believe travel to justify fleet We by level. $XX.X expenses. we volume adjusted margin expenses X.X% or quarter for rental XX.X%, sales reduction equipment. expenses. the to by COVID-XX stepped expenses, our in incurred last used partially reacted address capital Savings close to to quarter soon impact demand that of personnel clear or closed COVID-XX up the quarter any primarily SG&A terms see comps to EBITDA hot QX to freight growth declined million, the equipment were only fourth year it $XX.X Please XXXX. vigorous demand the million campaign early rental you of points year. rental the of of Adjusted lower and average quarter selling lower quickly down expenses QX, capital prior DOE was of $X.X QX losses gap shutdowns million, then the that quarters insurance of of the the Adjusted we prior compared a rightsized XXXX, and $XXX.X decline in fleet turn expenditures year-over-year, the the investment. became million of year. in XX. lower prior and the the made through X% lower Slide in of as would costs and have we fourth and significant also XXX and and revenue, personnel-related rent year chart, as costs of offset in due in fourth primarily $XXX.X higher OEC We deploy basis X rerent, million decrease in steady In rental was right-hand plenty to The over in have get revenues sales Slide was can used EBITDA billion XXXX that by impacted highlights which waterfall compared million compared in $X.X cut EBITDA was to with to decreased markets

cash As a and capital consecutive and flow of positive this our result, flow of free we cash is generated well This doubled $XXX in the have our since exceptional than free XXXX. extremely going $XXX second we year million preserved million. we more public, year reported

Our range. equipment at below net guided well CapEx million, rental our came $XXX in

also of team collections remained with our productive, XX only receivables a quality and outstanding balance day healthy sales active Our remains and days.

We of a continue year compared to with which reduce XXXX, XX, as X.Xx net to X.Xx decreased leverage, ago. December

about leverage we'll December of below forecast billion share cautious B+. debt more X.Xx actions BX and the we'll modern are debt forecast in and free to Total was off ratings target flow $X.X fleet reduction previous our a and Xx is target of down in economic a solid forecasts. adjust million The $XXX we from locations And liquidity invest to continue industry no cash the American down North ample to industry quarters We the X.Xx, new range with XX, to Coming balance credit XXXX history, our stabilizing and and our $X.X XX, worst Slide becoming consistent. XX, capital cash had couple December apply were of to Xx. challenging ARA XXXX, to range a allocation, growth. XX, a latest The current of of forecast now XXXX. of our maintained for us at to and on have future. revenues. probably took the for near-term through as of navigate the remain our On taking and our XXXX. into forward market credit environment to equivalents billion, of million. the is comprised forecasting account is next industry liquidity $XX positioned and most we primarily as American in by well billion facility overall $XX recent With increase this availability rental forecast XXXX. of The we We into December billion total XXXX, for over XXXX maturities, revenues of rental time. and ABL refinance We revenue best of the The to XXXX sheet from trends, a years the $XX couple is improve macroeconomic estimation North modest rental net pay

the estimate current XXXX As a ARA you rental was from levels to mentioned to earlier, can back in to XXXX. industry. levels. as see rental resets levels I previous before reflection, returning XXXX the industry decent we chart, in the XXXX XXXX, fleet revenues peak And for have reset our On year

well are to markets. believe in set end we able our up respond to demand to we be So

Our tends benefit capital. to some rental trends in as industry recessionary times as and resilient is when the such in conserve accelerates our ownership these, customers of ways secular to

we grow under with than is that XX%, penetration of an macro many level, current faster markets. While well rental to about offer equipment end of versus categories ability still our industry provides are us estimates ownership which

included We our in return be guidance. previous be to are of which we our optimistic cautiously in XXXX, to will will able that profitability peak levels

operator is has dependent Rentals demand of the relationships. established to long We fleet and market. Scale history market, a are geographically is, in freely a a environment. Herc can and strength not any both third largest by the also end and one move on is rental the challenging where end

select capital the advantage growth strategy and equipment. the opportunities for to markets select have of take and We in

our and to is team of veterans, our our and footprint continue seasoned comprised market. capabilities service industry to intend advantage expand size target leadership and Our we of take customer to penetrate

revenue growth will for there as industry activity XXXX target. to plenty is for of Our be we to rental outperform Herc projected rental believe goal

and we We update. gap guidance closing share our to peers. largest On market our growing are our XX, the with have Slide committed

We are cautiously optimistic with our outlook for XXXX.

on with rental focus we with more With back believe the expect of and targeted turn to million $XXX despite the to operating momentum net COVID-XX a fleet positive million a equipment as are volume impacts results. I'll is impacting our from return normalized structure our our million. our end fleet operating and continue our strong headwind guidance we customers lighten up a not dramatic we lot in environment. our return markets our continue XXXX XXXX, XXXX the With XXXX of a customer $XXX and we in that, call expansion growing look focus markets we a in have to CapEx early $XXX accelerate rental reflected for little us, and and positioned We pre-COVID a segments CapEx, net a key margin that normal to categories, to the to with in from lessons to anticipate and into current behind to increase beyond. a have are million And our directly comps chance and With We The exceeding growth growing EBITDA fashion. in XXXX, of $XXX in on markets on good of a and cost pre-COVID learned in growth environment, range well profitability year. range for adjusted our Larry. the to we QX revenues to

Lawrence Silber

Mark. Thanks,

the This with shows X we've industry the peers. how over far to our turn come last slide years XX. in gap please Slide Now closing

increased comparison XXX the REBITDA margin to prior Our XX.X%, over margin a XXXX adjusted better an REBITDA year. XX.X% a and from of low EBITDA points of cleaner of XX.X% in margins XXXX improvement in has with are basis XXXX. even

you behind we we can in and to costs continue With net top XXXX, As leverage to to focus to our X.Xx. reducing leverage from on intend substantially us, X.Xx since line growth control we've see, XXXX margins. incremental net improve improved to went public

initiatives, for to we'll Thank M&A new geographies, this your for and add growth open accretive Our products. flow strong and continue line. greenfield please now flexibility And provides and time new industry free the locations we'll verticals in operator, morning. cash you seek select

Operator

[Operator Instructions].

Dobre Our will with first Baird. from come question Mig

Mircea Dobre

to color outlook. context for how thinking give a of And about in would this where all as I guess year. underpinning appreciate little I you XXXX your team here, little Kind us you're question appreciate I like the Congrats Can what's gross maybe to understand with where to XXXX, start about on very trying baked -- a they I into you're revenue kind maybe on a CapEx how would shorter-term challenging bit your XXXX? EBITDA. of equipment also what's guidance? thinking color how of growth? of a handled

Mark Irion

in continued soft Yes. from QX and running stronger gap guidance COVID I towards the of year-over-year for terms and looking XXXX, growth comps of at QX volume mean, we're Thanks, QX. sort with Mig. in in really the and in year-over-year running into volume rental looking closing momentum then we're growth into of sort

sort just structure don't staying the get EBITDA with sort learned cost of XXXX. we we're XXXX improve rental as in the terms room revenue, relatively get So I We've should of pushing were got of to light towards there margins really levels. back think pushing during we we'll but lessons close.

So XXXX. don't see structure we to cost There's getting EBITDA less the revenue. slightly towards rental back room margins improve on

Mircea Dobre

not I presuming than you're to revenue the rental ARA if up, but forecasting what for to going be going 'XX. it's quite is to XXXX saying this, up higher But levels? is understand be that So I'm

Mark Irion

Yes.

-- in the grow an our see got in that that a to we've commentary business. mentioned of overall the in opportunity sort we strength think the faster market general, than some we I of just given

Mircea Dobre

component? the CapEx on And see. I

Mark Irion

In between of and sort XXXX XXXX levels.

in invest in growth We're that in healthier cash any a took fleet year out dry and strength going be to invest to generated lot flow where last or with got We environment. to we've of positive So of available a the free categories the seeing powder in demand. areas just able QX, we fleet. we're equipment

Lawrence Silber

greenfield rent locations. in Or

Mircea Dobre

right? that's obviously, the X%. a Right. your XX talking You're was scratching me thing take, your as to in to This my X% looking slides, growth down head bit of footprint. that got fleet or But exiting give is, X% Well, I XXXX with locations. kind new XX little through about so you're

new If be going these to you're there. locations, to opening you're have some going have fleet to in

implied kind should well? in looking sort thinking near what something terms are as gross your give it of exactly we because, about think then or off? CapEx? would Or to close if this by I'm of anywhere you math, CapEx are what -- as done be you've disposals in of take, So trying gross at in right, $XXX Do XXXX, is I am be to, million how guys to

Mark Irion

mean, mentioned, looking I I in somewhere of Yes. between XXXX. towards, and XXXX kind as we're

touched time. might So be how in And of terms CapEx a little haven't worth $XXX math we for off much I fleet gross of long consumes. think greenfield at your million on bit a

at fleet to necessarily off have can the move And we -- So of don't they all or think around of to disposal. year, beginning terms might be the doesn't It number be sort fleet. your in -- support of them. the I growth

massive disposal don't changes So of we XXXX. see a the and we most QX going terms XXXX, made during need we've size fleet think that of in got into I necessary of

Mircea Dobre

longer-term final a my question. of very That's And then question helpful. sort is

you sort you As penetration your has of infrastructure, think business, a mean of But the and opportunity as X that to X or deployment industrial, one rental through I'm you contractors, business here, see look the look And as of most long-term the what curious, increased verticals you as at does your you're government, driver. cycle these for capital other, mix industry talked about years to do the out? penetration? looking which of strategy next

Lawrence Silber

be believe was wasn't probably quite well wouldn't felt we regardless diversified optimistic means pretty of in which taking we of or And question, and space customers kind across the Mig. that growth, there. about we we're room there. If our our across that are the whether of that had frankly, Good going industries be grow, serve. would wouldn't for to we the we're share, it We we all ample industry be industries we Yes.

those opportunity, growth that And optimistic of take industry pretty and in. in grow ability the we markets share itself, both to and play and within verticals the we're So the or industries. about our for the

Operator

from Ken question next Our will Newman with KeyBanc. come

Kenneth Newman

on solid quarter. Congrats the

question little your could you could about a deal Champion just curious the talk announced. net opportunities as given M&A leverage the more lower the that year did bit if bit you me. first market about for just I'm you talk that So I'm for the a target. fact curious if little progresses, you

trying progresses. capital balance year just for the priorities the deployment So out as to

Lawrence Silber

Houston our more that business a capability on focused we at on national we in business business ample footprint question. good marketplace. that government of contractors, coverage expanded our was didn't coverage. added Yes, Also, the we that and Houston traditional portions whereas that market Champion in significant account our had in focusing local looked it geographic believe

the was for rationale company. reason everybody that an remind and the primarily that. So I'll that growth organic we're

for That opportunities greenfield. greenfield to like new However, gets up some open would we'll find in a where opportunities it's gaps gives and we also look in new that new a we'd for into. be We'll look opportunities vertical a us approach, estate have not vertical additional a coverage preferred a would as offering capability or coverage that new available real customer a products or our to or approach. our in result and go easy us product readily verticals be of to M&A for

are M&A. So opportunities for there

to in selective through primary And very greenfields. look we'll are at. identify growth our those. we organic again, We be focus is But what going

Kenneth Newman

Right.

headlines seen longer-term your obviously, after we've a fact falls week color over weather? So of weather opportunity severe view in the embedded from Houston, kind in Maybe impact potential given you've seen out? severe last that the everything the just any And what's from in area. that are about on the they some

Aaron Birnbaum

on this Ken, comment Yes, I Aaron. is a crazy Yes, week. can that. it was weather

We in Oklahoma. have so in XX branches Texas, or and we branches have

got they hard. So pretty hit

back couldn't It Some or power our for Regional had Vice I was X mostly recently because X night to branches trying trouble those President outage. last open. days. of get open some branches day talked and just that the of to

an activity but think the just event So for right think coming that -- back it week, we're online. we'll back. We was I bounce affected we'll

built drawing equipment. business, generation needs really specialty to they're power respond Our business, with to ProSolutions what and for that's our those is

news see coming busy the the during time, to well. this as been be days very to you very, So in busy the they've and on I know respond very that issues they'll weather-related

Kenneth Newman

sense. squeeze Makes one, I One if Right. could one just last in.

I Just question, about that the improving on margins returning just any thinking help earlier Can flow-through comment structure. think And to the cost in Mig's the aware margins you going made are just understand year back be you better of the terms kind as cost remind progresses? us actions the should how of us, EBITDA embedded you're for of new about guidance? EBITDA we there

Mark Irion

Right. Yes, Ken, question. good

cost-cutting are QX did there obviously, activity. of dramatic coming that start of of costs lot back. costs back Those in a and the sort So coming the we curtailment in

or starts QX cost back The that stuff will I had resume. So place guess, the normalizing, costs and back in T&E of payroll furloughs and end the starts year. of the we in in getting the

of there's there. couple not well, a couple of sort but So of divergent sort impact weird, a weird, there's of

margins for So QX level equipment EBITDA the remain don't of during REBITDA in anticipate should losses had same there's XXXX. We that XXXX flattish. in and increase. room margins we the sales to on

So they're of sort come some -- be back. non-operator those other costs those going operating of to --

towards end. the margins, flow-through sort to below the some could a lower talking we during flow-through of of of of normally flattish XXXX. normal end running comps, XX% So down We're just lower the range XXXX But be XX% sort and impact the environment. about that given of in REBITDA

Operator

will Sachs. question Revich come Our from Jerry next Goldman with

Ashok Sivamohan

Jerry for Revich. on Sivamohan Ashok is This

guidance how first in is Regarding the the embed? the at guidance what XXXX quarter? tracking EBITDA that level And increases midpoint, price of does

Mark Irion

we to don't really speak pricing. specifically I mean,

XX can XX you of of Page managing mean, go, think on job sort XX, no, -- sort at if price. pretty of the been I -- XX. it's look XX, here see or you done good terms in Page I we really chart a we've

dropped haven't below. we So

seen sort QX. it's We seasonality in of last XX sequential the QX. quarters. for since haven't been We've improvement into running normal X bps We're --

challenging certainly pricing during environment. typically we price course positive the But a XXXX. of So it's are looking to resume to

the on pricing, of sort last of excel we're course pretty minimal So tools it's consistently. our in a place sort and the down exceeded of all of terms the couple in we've continue during from able to move that looking to be improvement some to industry in quarters XXXX. of got We've that to the to something

Ashok Sivamohan

plan its think And should is and Great. mentioned invest XXXX? you to to aggressively the in we potential the XXXX. sustain of in meaningful in the How growth ProSolutions business business

Aaron Birnbaum

strong could year-over-year to a quarterly cadence, that in those well. week and there expect And We'll businesses. type in higher to some disasters, we're we growth growth invest get on there's respond and specialty as normal or very rates we just natural ProSolutions they'll when And like continue this double-digit events our then seeing right, environments.

Operator

Thompson come will next question Ramsey Steven Our with from Group. Research

Steven Ramsey

start with expenses DOE on flow-through. that the bringing the into some with SG&A from openings branch how on you to color and But in to can additional base and Maybe the talk expense XXXX? Champion, factors

Mark Irion

-- single more towards if environment, referenced. move in of I I a -- or keeping mid- to of growth my as of at, normal I have back of cost dollars. as normalized gross actual to those in them of of in single mean, neither looking get mid- high-single We're material XXXX SG&A levels, XXXX, DOE and sort mid- revs we both terms cost a of words or early below right, impact a but digit, percentage out can sort to say, sort

profile sort opportunity of maintain for going an is forward. there to better So us a margin

Steven Ramsey

net of Excellent. kind more it, midst details doing in And more why of especially on being go understand target to also Maybe to openness into acquisitions? leverage increasing the lowering greenfield then openings lowered. and

Mark Irion

free in big sort down for just And need any medium CapEx. we improvement sort see just year in our really usage XXXX profile. a in think cash in reduction I big of cash. of this We've net flow mid to got really don't it's any of the continued a pay with term the

opportunistic scale we're stage. see terms And flow then something be new sort with if turn of strength, come ourselves and at that staying terms this to So to also around free fast some acquisitions grow below guided doesn't greenfields when going communicate to anticipate the of ability show and of markets and the guidance expansion range, acquisition. cash continue I fleet came positive. in big We in would a up, along. any mean, range we of that that in

it's and really greenfields. anticipating acceleration continued just acquisitions in So bolt-on

Lawrence Silber

that And either do. that would anything new leverage plan well we that we that, us forecast guidance or keep Steve, within about, to talked

Steven Ramsey

reduction in this just you more think flow general cash of topic Great. And I excess absence the there repurchase interest acquisitions is thinking with near then on, or is I'm on end low debt one coverage mentioned levels? and of cash to and shares going outside -- to to CapEx of of EBITDA willingness cash quickly operating already interest the guess, these follow I expense, the range. at flow much

Lawrence Silber

think of sort continue company, that, point, of we Yes. that our And Look, investment free fleet, for to branch cash be the the to flow some the that is invest what be position openings M&A. that's whether cash bolt-on new reflects we'll this I growth business at believe or best whether the in liquidity this and in and our position do.

Operator

Instructions]. [Operator

Elizabeth Higashi

we've one think given -- got more. Grant, I

Operator

to Would you the me take like one? last

Mark Irion

Yes.

Elizabeth Higashi

Absolutely. Sure.

Operator

a Newman. question Ken We from have

Kenneth Newman

confidence pretty question bit looks the for just Or -- had about giving obviously, conversations just guidance optimistic I'm in XXXX EBITDA. of maybe of terms you color any Can on near outlook? that just here. curious, one the in just for with provide projects I the customers in some you more little having outlook is securing you're qualitative talk here of what's term? their terms a the your on

Aaron Birnbaum

is This again. Ken. Aaron Sure,

stronger. sequentially, through last rolled finished and the quarters, As got year, we we as we out stronger

end even you operate maintenance, industrial. coming in ones primarily We going show needs was our and energy decimated opportunities we work down preventive new during us projects construction getting need last market. the of health alternative continue come another demand, those really Dodge some Then were got a projects large all So postponed this delayed shutdowns, We've those diversified markets, And be pandemic, And our and that about and kind getting now those, segment year, And at government. -- as We're anticipate continue when big of turnaround be our look get you online. when the pipeline quarter, and just come all in such where see with entertainment it and where last then of XX% is to we normally online. do to on will is segment We that to got seeing stronger, done. it's projects. to participate projects. like it then probably very last And is. those see, They are they They at really end -- our that we tools, know point business, 'XX. forecasting can IRR. work a year on care our into as the we the to year customers that's and or we planned they year. we up centers back on data to related Most their to that see a people renewables. but do that and long of

quarters And diversified. before get manifests. are We're couple another it our think, work I telling we to customers just the we're optimistic. down that really us So there's through, is coming and pike, -- of

Kenneth Newman

Right.

alt you're I is on for deployment of something lot infrastructure, thinking renewables, you might is how it Or take have of actions? about color happens you obviously, energy mentioned or You any not, whether Do people's passed? actions think terms minds. if have a capital any to the or potential commentary in

Lawrence Silber

that before this in It even to XXXX get the new XXXX. look, I've into to have ground plans. its bill there's in through administration, make fortunate the enough really any passed are XXXX, anything hit shovel-ready that really well projects no doing. into we market. XXXX a way into was or even will funding, going and bill sort And don't to we're of infrastructure if bit be Congress if of been to will I our reluctant Ken, that Yes. a think And include forecasted that any spending

our So a done. breath holding get that cooperative we're not on Congress to

and really that do, it's business. our we of when If we'll into deal it if and it don't we gravy, So forecasted happens. have with any

Elizabeth Higashi

any to just I'd us seeing And call there other the questions, other today. the information My back website. for the you've is also free Thanks, contact of questions, to on Ken. and further give that feel joining no on obviously, the just thank buzz. like if at a me And are deck please got you, all,

talking us forward you look Bye-bye. we joining to and So you, thank today. for with soon, all,

Operator

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

You may now disconnect.

Herc (HRI) 18 Feb 212020 Q4 Earnings call transcript