HRI - Earnings call transcript Q1 2021

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Operator

Good morning. Welcome to Herc Holdings First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. to conference like Higashi. to now would turn over the Elizabeth I go Please ahead.

Elizabeth Higashi

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

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

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

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

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

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

Larry Silber

Thank Please to number turn X. slide Elizabeth. you,

months start We’re off great to a XX in What a makes. difference XXXX.

ago, Just to like when uncertainty impact we the quarter, a reported due potential of guidance of pulled the we COVID-XX first the our pandemic. companies, year other our

Now, year we business have grow months just to ago. a increase and year confidence the execute to full the continued and the later, provided a we’ve guidance few

Our day company a on equipment outstanding of the build purpose serving They efficiently XX in rental customers focused that our communities to of team future. drives industry. our professionals by The represents staying employees X,XXX effectively. with a a history our to brighter this customers every years safely, help and do is over and

Springs, new Angeles, the the In April, Pittsburgh, quarter, Area, San in location Bay suburb During California; XX Pennsylvania; we in that independent Los three Santa locations area. first we and Houston, Fe a our Francisco major count locations two increasing added to in Texas. greenfield acquired of metropolitan

we in As operating today, and the and locations XXX across States are Canadian provinces. XX of states X United Canada

volume our anticipated saw to on normal turn seasonal rent X. slide entered meet fleet with please in to the well the and year Now, improvement demand We the quarter. during positioned number

As as growth prior specialty rental generate contributions entertainment from a did result quite rates strong expected, down volume our year but we still not to businesses. and did were revenue return our of slightly, levels and

line mostly results, year-over-year which also significant were XX% flow-through, record not pre-pandemic XXX% on continue our excellent which adjusted on us beat for exceeds operating This bottom QX EBITDA. a excel growth puts leverage improvement. QX XXXX ‘XX, in but track only year. return over With we to and With we delivered in strategic the positive more than drove our revenue growth, rental to focus

adjusted ability to EBITDA with end guidance Our confident new full strong year markets, have us are to of million million range million. in increase first along to a $XXX steady in million seeing a our range to the $XXX from quarter of our $XXX performance, our we $XXX demand significantly

a We for year XXXX are previous our XXXX. looking in beats record in record that substantially

X quarter was a continues XX% $XXX.X for financial share We of by driven our diluted of brief points. of the mix of slide please Company, rental and our Now, entertainment increase compared with record business an the This $X.X million market revenue to first a our X.X% $XX.X grew quarter loss EBITDA Equipment $X.XX by the our year. income in was million overview Adjusted per results. a million to million take a quarter, positive year. $XX.X first share as or prior business XXX EBITDA by compared turn which focus ProSolutions strong to or became number increase margin in first and or for last year, diluted improved reported operating adjusted on net the per first share tailwind. on basis prior leverage $X.XX quarter was

are is year start we This a off XXXX. the to see and strong exciting progresses. indeed Herc, As team look can time an you more we to in our as records results, for forward from breaking

about of operations Birnbaum. Operating in quarter, our the more Aaron here the for Officer, Now, Chief details is our

Aaron Birnbaum

Larry. you, Thank

team Before our appreciate both challenging XX first results, We opportunity our one every members. Herc. After of team to greatly and discussion would results continues the this I and of of members. my professionally. like speak effectively to take congratulate each -- This team quarter and for start contributions our perform all of months, Congratulations an thank themselves. I team to our incredibly

quarter. slide off X. make continue Now, really strategic to to we to diversify investments and base please our customer paid turn verticals The this industry

trajectory and Texas business by remediation heat and as the successful ProSolutions storm of growth driven as well solutions events, quarter growth that winter as weather-related states. continued supporting the focus took such on the XXXX hit first the with in specialty providing from the Our market surrounding share its

XX%. digits Our quarter ProSolutions four last have excellent by QX, for generated by years increased up revenues another the and double in over

the entertainment has a a headwind pre-pandemic highs our and exceeded growth years to from will and tailwind. for driver pandemic We has opportunities and on focused business Our turned be a to shutdowns, remain now entertainment during come. customers

benefited impacted in saw our Central and our Southeast Carolina strengthening quarter, region successfully experienced Northeast, from and South seasonally acquisition integrated of business markets, early We we performance our and core a first our Rentals. and specifically operations. regional December in operating demand normal solid Champion Our

capabilities We our strategy our will in our continue to leverage and to operational advantage execute opportunities of end take markets.

to please X. Now, turn slide

most commitment of a safety. focused essential on and As health our provider important services, is

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

business we are the to all And vaccinated. encouraging in adhere to guidelines and team members of our continue to We CDC in be our operations travel.

our and in of We’re and this safety efficiently will health new even more system also track implementing performance health year, the which record, process a management and us effectively. and review help safety

no programs you’ve internal days. with heard talk various violations. initiatives, achieved no on vehicle branch-by-branch That QX a recordable operations our As XXXX as us DOT at-fault about is days XX% branch measurement, on safety In focuses our no accidents motor of perfect incidents, safety major OSHA perfect. one and of

help in means striving safely, It commitment team for driving the slide communications the to activities. safety means daily their and continuous also XX. XXX% and through that We’re particularly focus with them to perfect supplying Please will and equipment training. days, our efficiently turn perform always

billion about the the fleet was lower side Our of this of end of left-hand QX slide. XXXX. than quarter, OEC first as Total on fleet $X.XX end composition at the of the X.X% is

this as total invest specialty about record fleet OEC quarter. of quarter. more of to XX% which XXX and a entertainment continue profitable the of now to XXXX. first us were ProSolutions utilization a our This fleet, and a XX.X%, for includes in dollar We for of basis ProContractor, end to fleet contributors and for ProSolutions important QX contributed accounts of return our points growth fleet, and drives $XXX million the improvement

were see the in chart, in disposals million to $XXX year’s the from a fleet OEC first OEC were increase million quarter On slight comparable $XXX XXXX our of you compared sold right-hand first Fleet million, in at last XXXX. expenditures quarter period. can $XXX QX

looks be a in tight Our the has market job of from new getting a supply for what OEMs. to fleet done equipment department front great

deliveries several all have orders scheduled our arrive purchase the We placed months. and next to of XXXX over

slide in equipment refocus The age the pre-pandemic XX. months our any costs average levels quarter. of with disposals XX and at experienced Please not increases and XX% at sale in proceeds years. our turn returned equipment wholesale for The demand to a of as equipment have We over first to prior was OEC strong channels disposals. on material percentage used retail

national Our business specialty The growth core diverse broad customer in to our mix is QX. base with account and a customer strategy. drove local

entertainment drove QX. growth Our in business

upcoming construction warehousing, quarters are industrial demand. in customers utilities segments energy, and support growth we to other in and major strong health manufacturing experienced up look gearing general seasonal Our in where care, and

economy, growth in recovery are the the and focused our end the strong XXXX. I’ll Mark. now, are segments a on pass We to And high on to markets showing call generate of momentum

Mark Irion

Aaron, everyone. good morning, Thanks, and

continued Our clearly well first is scale quarter the strategy and performing have business in a environments, a is capable we in of that performing demonstrate current that and to of successful it results all environment. exceptionally

pleased in We with really QX. our are performance

And trends expectations. and the performance year rest we for outlook exceeded raised our results Our the on seeing, adjusted current guidance. the our based and own are our of we’ve

themselves. for speak results Our

large premium our excellent customer our North customers on to to are for and provide both We’re throughout rapidly small and projects. executing expanding America margins strategy and our service equipment

focus couple Our on improvement the last off. of years pay to over margin continues

and to capital in profitability. due from Equipment leverage increased million improved record to mix we first rental pricing. shows economy have have the of of quarter the $XXX.X flattish and available XX first growth operating results. Slide primarily of our As to quarter summary accelerate recovers, $XXX.X utilizing million XXXX, a accelerate to track a the revenue X.X%

these next slide. discuss will We on drivers the

deliver or the profitability of diluted million $XX.X per adjusted net $X.X diluted share. continue per $X.XX first compared solid adjusted XXXX of income share $X.XX to or net quarter with income million in of We with

leverage increase first to in X%. margin basis continue a historic was model, in by adjusted over of We the operating XX% flow-through our adjusted $XXX.X This only XXX%. XXX an XXX EBITDA driving of with drove REBITDA growth execute of EBITDA revenue increased quarter, high. margin to trends an XX, increase average from REBITDA the on in points by the XX.X% million utilization points year. was in down XX year-over-year compared pricing quarter margin rates the points first latest our our highlight with to to XX.X% reflecting pricing illustrates for the graph quarter. REBITDA in the slide upper also quarter. basis only on last by history. The left quarter and basis On we of highest

pleased with will swing we the are to thanks the of managed in we to year. challenges quarters. that four rates in nominal decline positive last back, XXXX, the And Looking we through pricing quite rates flattish this

sales is our made of suggest our We continue from lead are we’re and as and industry estimates whole times the industry-leading for the discipline professionalism The a an benefit likely fleet fleet the environment pricing on tools that team. in positive adjustments to XXXX. in support orders seeing to pricing and we that now by

remain of turned big mix business year. and the businesses in seasonally part the expect a of of QX. rest positive QX rates of utilization. this prior and the Dollar entertainment ProSolutions utilization in improvement quarter strong first -- for in Our improvement in we positive quarter during came points strongest the year. with growth toughest dramatic from is the change rates A the dollar our quarter, the for from XXX XX.X% year-over-year March, basis to was

up is in with returns also by us a for sets year of to and this rental record year-over-year. but The climb utilization and a X.X% still mix continuing forward. So, is revenues the move apparent steps impact for down big terms going up fleet us

on and offset and drivers to So, growth volume, rental slightly from we of X.X%. by the were $XXX.X Couple an quarter, the remain mix decrease lift. focus by basis rate XX was points of by of significant lift this rates leverage XX% million a to increase decreased are keen and and contribution these results control. may the to on expenses XX.X%, million, margin down revenue from re-rent contribution $X.X the primary down but to the revenues in The with continued strong the growth in compared leverage primarily grew DOE X.X% for On sale going we revenues. $XXX.X positive. operating Savings We in leverage $X.X through A first contributors. And top basis increase improvement. our XX, in travel forward positive of by contributed the an also on X.X% will Adjusted our the improved see million EBITDA personnel-related costs debt expenses. mix on SGA reduced of compared with revenue primarily of operating lower first by quarter growth adjusted rental cost due or maintenance to XXX of profitability looking were the EBITDA from profits million, with rental seasonal was and continues operating and quarter accelerating quarter XXXX. with slide to volume first million focus year-over-year, equipment bad focus and and $XX.X points expenses, XXXX.

flow-through change last our first execution quarter, gain on wholesale which years highlights an especially a quarter improved This the profile channels quarter. focus REBITDA chart on some on equipment to the few operating and percentage was the over impressive XXX% our XX.X%, retail in as a and leverage. this last highlights in with generated also in OEC. We margin proceeds and sale the improving points margin the our contribution of XXX basis of

margin improvement of leverage. and our a long focused time XXXX more We in have terms operating learned for in been on lessons

will but start in Going and QX had COVID to or at our connected impacts roll increases costs in XXXX. base QX This over forward, slightly to unusual short-term our rental increases volumes with similar somewhat. will some and shutdown of run we cost flow-through rental unnatural some see in revenues. that smaller We affect effects expect percentage revenue

cash first We million these our through to at continue year net expand past we REBITDA after XX, to free leverage. million on COVID of our of look continue we’ll slide are we of and $XX generated to rental the quarter. $XX operating flow quarters, XX% flow rental least On to in get CapEx growth margins. revenue each focused Once

We are million of million fleet guiding net $XXX to $XXX full for the to year. CapEx

we leverage, X.X expenditures XX in to first and in March the is compared of incur that times quarters. times a cash decreased results X.X Strong the also reduction quarter the net So, operations second reflective to ago. not contributed the fully of from with which will as third year

end X $XX.X of cash flow grow X was future of about reduction allocation lower conservative growth the and debt growth remain $XX to will into fleet maturities, XX, of into down cash to comprised XXXX. March of no our We and and leverage. XXst, have of times in liquidity into of now million strategic guided strategic credit our support availability the March of we range cycle. and free With ample Total million capital and after ample to as a billion are on pay We net our revenue and new million. making times cash in near-term for over our XXXX to $X.X rental equivalents total facility in from debt December $X.X primarily as capital ABL apply investments liquidity of We fleet had locations in M&A. new XXst, the

now BB what results. S&P in corporate consistent bit XX, quarter the a show strong also slide Our sheet this a improvement difficult is Earlier continued raised and markets and on be ratings. margins this in look in which solid our B on tepid year, in focus resulted to upgrades quite we balance to operating industry our ratings debt, latest and forecast. debt with our the their minus square It’s related of strength On our to Moody’s plus.

Looking rental at X% revenues forecasting on top to XXXX. the around in industry at the grow chart ARA left, the is

the we inconsistent with this and We past consistently fleets as in have of rate customer as the industry suspect typical kicks bit it’s general. QX, end with light rest mix the are QX, well-diversified accelerate than ARA companies a rate seen Herc I broad growth into scale of rental for well-diversified year to close forecast up in grown will in not in Rental QX seasonality XXXX, that in. have scale customers. of of growth faster rental but is base company double for to when is the that the a with experience. And also a a favorable

supplies refleeting looking to of cycle, a rental and of also also tight stages equipment We’re the tend industry. construction to in early the benefit be

this were end does That of activity slightly. feel be in nonresidential XXXX. terms will markets, supportive starts level as In up of though

rent is. to fungible, we’ll is wherever the equipment and activity Our

So, necessarily X the activity struggles demand of drive of our level nonresidential by about or impacted spend. not demand in XX% tends business. is rental pockets Nonresidential spending is to rental and X only of

the over big revenue a So, also last is diversification years benefit of base the our the of current environment. couple in

result, a not As the nonresidential directly construction. majority our is business connected of to

took but the not Our share looks yet, a and also is Entertainment pockets, Industrial pent-up beat were be put initial next for our way. team gain specialty of sure current to guidance up we that year. the It’s our advantage XXXX. couple is our well paying year. all to grow in rethink put the rolled business. business cycle, and strategic XX% is rebound typically we sharpen this for the dividends, also the lot we annual real own there is content look of to enough years our and investments this be us survive expectations to last our we less business feels is February, part. in Herc having be matter to rebound opportunities a stats plants, economy the looking in benefit, bit plan of continue production for QX demand we showing and but and out maintenance up expectations expectations in our that three to certainly later our than our XXXX also the it down the QX quarter. No the to the likely When in we growth a in in this weakest grade a next of our as and of engine our XXXX in segment seasonally only way our live in with for the the supporting turnarounds that should meet here macro the where way, beginning we a sit has soft cycles, together event executed QX and toughest did like to may pre-pandemic cycle. me at being It fully we had and results. came may but still pencils Not comp, big formulated most meant

dollar a We move in So, utilization points. basis performance go for the backwards XXX we our doesn’t big annual translates as QX to improved by into seasonal strength. beat our projections in Dollar utilization year.

needed rental It revenue with EBITDA generate for also reforecast don’t will We in we to fleet like of points we basis XXXX. So, we margins looks record head to XX.X%. Margins revenue seasonally backwards taking in into quarters improvement generated rental the utilized go now than we XXXX. XXXX. less QX, XXX strong of as

looks a to a record up million guidance our guidance we’re it QX year, of unchanged margins. EBITDA is and CapEx track magnitude on forecasting the really has makeup to for $XXX taking So, to equipment million. $XXX at year rental now Net are we and million. beat us good $XXX like $XXX of The million

the to With performance into for industry with as have and back cycle. looks we’re I’ll we pleased the to start that, very for anticipate be next quarter, years a with the call we new get what few turn a up We’re Larry. performance hot reported very the the over excited we

Larry Silber

industry over years five we’ve closing gap This peers. slide And with slide Thanks, come far XX. shows turn the how to in now, please last number our Mark. the

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

from times. since As we can times reducing XXXX, improved net public see, went net to leverage X.X X.X our we’ve in substantially you leverage

new up into and operating As to what cycle, focus we be appears build a top to we intend on industry leverage. growth line

Our cash liquidity strong growth flow free provides for initiatives. new

for fragmented. larger and advantage comprised to is to service There is and huge expand of Herc our we our to plenty equipment target. be continue are capabilities activity rental veterans, intend of rental markets. to to leadership market Our customer and scale team and seasoned continues industry of our penetrate The footprint take

to peers. our market the our We and share are with gap growing committed closing larger

please So, thank you. open And operator, now, lines the for questions.

Operator

now first session. from of Gilardi will from is Ross question-and-answer Go Instructions] Our begin America. question [Operator the ahead. We Bank

Ross Gilardi

rates on math that that I points is just your down around? only number X%, correct. on OEC just think just the to or imply year? would rates we fleet the to And like moving X% greater rent down up is your I logic like seems or for than, to is to wanted investors my is are other see get up quick what that expectations. I if Does mix And are the U see is up X.X%. way probably, in but to wanted basis said. most take some this it the there by like that’s run actually something if factors, could are case, your But, assuming perhaps on I outperform X% just market mean, year-on-year, paving I time XXX tightness fleet

Larry Silber

don’t comment but may Mark, comment Well, question. saying Good accurate. normally is we directionally, margin? on certainly, you’re what to the on time you Yes. want U,

Mark Irion

No. Yes.

You’re right. U there, a is There’s component directionally but up. in time mix

rate, in yes, March. no, a of had slight terms decrease XXXX. swung positive We we’ve in In

a also to but of through in the trends likely fleet the do positive go to seen sort a Also, in we in see as year, tightness year, to we increase big be likely is early XXXX, the what fleet. and year. So be rate the it’s tightness in not in to yet early

the are quarter. So, the seasonality out of then a the end get should show the into that in it seasonally we indications year, impacted is there, as but up. back And

Ross Gilardi

CapEx And outlook, net moving more the not to the bit. little formula Okay. a maybe unless a around the is bit then, versus color gross on decision little raise

more equipment strength the not lead and in you could or just the you is are extended given season Just curious, wanted business, your it, just fleet if just for in get available? times the time and too

Larry Silber

year, to and I early think, and positioned that. last are we well receive our placed CapEx we’re Look, positioned, we well Yes.

drive where our we want we’re still room we up at I to -- some a have utilization. point think,

So, we’d to like And correct. utilization. to you’re continue drive

probably forward in late Aaron, rent. gear, going and may no anything when you that’s in you’re in gear further comment gear seasonal looking there’s and fleet? off to receiving sense think, a on at want receiving December time I when comes now, the the year

Aaron Birnbaum

what We I our like said Larry. orders we did feel as pretty mostly. echo year communicated, we’re as mid just get in of this Thanks, as year would part you early, positioned comfortable well feel through we No. for go the and the we specifically.

Larry Silber

Additionally, we’ve sort of slow away changed our on a focus we’re on used auction of that focusing cycle will more sort channel, equipment, and the disposal And down Ross, retail shying wholesale. bit. and naturally from the

Ross Gilardi

then, your you more bit. quite you talking because I’m really was ProSolutions don’t color a that? just And more you business entertainment little in think correctly. I you us to say it. specifically color about you’re like little year-on-year It And quarter? I amped Can about XX% about And this guys, up I sounds the the about wanted specifically. business excited if business there. that give not events Okay. up it’s yes, live did ask sure seem first a lastly, heard a But

Aaron Birnbaum

strong really very very, amazing The relationships, in with pandemic entertainment the to back come business. it’s job team is first zero quarter the quarter the phase entertainment and And was ProSolutions up Yes, you during This during recall for came the last went and from did pandemic, out really year, the the again. to build an Yes. as XX% year-on-year. strong. business the we the business, Aaron it

manifested. So, levels as were are we are that they a pandemic year revenue higher than said, the we ago, before -- those

and So, the we’re about a in expect entertainment lot done excited that. of has what team we division, more our

out the of know, new there. we there’s as -- you people want content lot content. As craze content, A all a

we’re invest So, segment to as thing, kind the we growth. well continue of that. fuel benefiting One last to from in that

Ross Gilardi

Okay.

still entertainment more the way in here events, where coming least they’re it back, live like opposed at they a Northeast? long filmed as to like it’s seem from So, are more which were, but just

Aaron Birnbaum

talking not QX events the May commercials. in At we’re there’s yes. TV, that. later film are back. is -- moment the year, be in But moment, and specifically talk live what the about At about

Operator

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

Rob Wertheimer

we those year of different not A crystal How a close, of I’m all your on fleet So, years. shape this starting in And summer out bit a are potential prior But we those on In at average than for a tighter utilization? or words, past equipment tightness is set the a that are sure Ross. less little more? case? ball of time tightness up than then, least of availability understand. experience you. from U versus Thank One questions on little up starting sometimes does my years. other -- bit for I do

Larry Silber

end Look, have of year past would the the tighter We a for years. had end starting spend of of say, the Yes. little a beginning up sure, out of year we used this we’re I than maybe year, in CapEx coming last gross fairly to the fleet dispose a QX and into we QX. that QX sizable to tighten knowing into purposely fleet amount going in fair

room business, was then in surprisingly tighter and the strong Texas by And the have purposely was that business ProSolutions entertainment in freeze just and Texas with some the it did So, our aided the a the surrounding picking area QX discussed then, states with coupled that little in up quicker. sort to a Aaron of had done. we tighten up. -- start We

standpoint. address billion from of the as fleet and and far fleet benefits terms $X.X supply in limited to those think, where have have rental we of on that might fleet availability the that areas tight manufacturing the opportunity start-up, is because it being I tight, available, hand, we As industry but and chain supply of -- the us industry gives be

will gear. We are not in experience a a position where of company not shortage our

the are and chain position we good But there yes, it utilize hearing our of supply have order from receive OEMs in to gear. that of the a on is we there all We’re -- and is all gear tightness.

Operator

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

Jerry Revich

I’m pricing the Nice cadence up sequential wondering of year-over-year, in talk was hear to just pricing. you Mark, could if that about March.

have you’re And would cadence pricing to March is XXX that that to the April? I Is moving get be to points versus that basis cadence how February. that seeing? in up XX think into

Mark Irion

much you it pricing the few can We’ve Without off sort up chart too of March of on sort quarter getting into going see basis you as kind typical a to move sequentially QX. improve forward. here it’s of through into been for a of points monthly granularity, picking page anyway And on XX.

work not it’s still out It’s So, dramatic. there.

forward. look we industry and to continuing we’ll pricing lead the think, going of terms I to and probably rate, are sort in that continue of

down was So, in wherever we in it to be slightly we’ll and we’re like opportunities XXXX. it’s continue take can. It -- going looking up XXXX, to slightly looks

Jerry Revich

Well, for the is cycle is basis about normal in points quarter up and XXX in per the XQ. reason XQ an seasonality question

And pricing running seasonal given few way comps quarter. you’d wind the rate, up normal be the folks fourth exiting look, up in a with at that so, X%-plus the

cadence to I just would that sure Because pretty So, think. you versus out how be understand I rate I want exit attractive, the that the -- playing make seasonality. see comps, how normal given

Mark Irion

said, XXXX. we’re at like looking sort for slightly of it mean, being I Yes. I up

The was for not has be in trends back been think industry, XXX time. some up far time. -- certainly of in basis XXXX XXXX general, those point think, It price some maybe sort or I for putting you’re us. I points might quite in

Jerry Revich

cycle renewals into down your equipment times you are philosophy through Okay. the pricing push with come used in talk thinking And then, position a increases for new thinking to price out, are you how Obviously, the that for customers? about Conceptually, you’re due? willing the willingness you’re significantly. to of how lead equipment good about up the just magnitude to winding conceptually, Can you push about heading here? industry and as annual inventories

Mark Irion

I classic little seasonally still too pressure is and amount think it’s -- I mean, there’s still bit have in early. businesses a outperforming, think still in of there QX business. I mean, demand, still is our the I it’s a been challenged specialty terms certain but of --

-- track we’ll on to a So, record We’ve got got rate. focus on we’ve rate.

where opportunities we will We take can.

that’s ongoing mean I our So, philosophy.

in really shaking it’s of the way already. We still end impacts though out sort as milk But will there’s -- our year, and on renewals. we’re from for of not of increases look we’re last the and honey still

out and execute of not the living So, we at sort year. open are the and part eyes we’re into can. be our continue moment, we’ll it’s to going to there it’s the of that but The moving where keep tight, indications there seasonal really

Jerry Revich

gross rental impacted, your seasonality points you for margins above as year margins, is lastly, normal levels, quarter or gross seasonally are out. -- full obviously is which XXX And Okay. so point basis first

low seasonality? in So, this of quarter normal should like will ramping like mind you of year up a should made we seasonality, about year be that keep point look operating think cost in what expenses, or versus beyond the what we direct the typical Mark, your and or rent versus artificially might about any anything volume,

Mark Irion

of was quarter quarter’s no No, real Yes. margin sort really that or adjustments this There were that. unusual credits improvement through and the impressive. drove

So, it for us. is new a baseline

the into DOE a I So, quarters of that sort sort improve transcript percentage you I that into improve QX get of you with get of strong as and would should and expect of real SG&A to just that the the more we and you run revenues. strong rental there. sort seasonally of then think, slightly seasonally worked trend if The and the see QX. operating with down leverage, sort into But was will guidance, we margin get as revenues as is margins

Operator

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

Brian Sponheimer

other or anything -- some piggyback fixed of travel would COVID over than costs, happened? speaking a cost-out you otherwise kind and before thought Jerry to think to little more was and you like learned have maybe that that what things standpoint you’ve is Just from so, permanent maybe entertainment, the past a what on year and

Larry Silber

on we how it’s learning whether or deliver we sort with -- the that or learned how service we of went new And it’s some our how we of how we will since think branches, engage XX, XX customers. so man pandemic lot from us think customers, things some look, over sustain. I SG&A And obviously last course months I into the we of standpoint, helped a Well, mode. material, DOE, a

into along as absolute revenue, flattish will the a percent they the seasonally go have to those said, Now be volume, we as ought Mark we year look, way. of but higher and up go volume, -- costs as in

Brian Sponheimer

Yes.

end, side. $X.X to billion $XXX the EBITDA talk below given be on -- By about I X.X more you’ll want debt. is leverage. against trailing. so billion The year $X.X in in or That’s Okay. X, net cost million

You’ve there What’s work? to to the incremental pick up put ability to for looking yards? out environment acquisition made that your one of note. for you’re like you what are And primarily capital when going

Larry Silber

activity Francisco in we San focus our further around density, Bay to that and our Yes. and the now greenfield forward. in locations an And closed additional Bay that up we going metropolitan did Look, and we April a in and Francisco increasing Area, market the footprint M&A San Area. have as acquisitions on at early look XX count major two continue

if as we what’s reasonably in find would buy activity, the make an and we’ll can large alternative, locations versus preference whereas those be markets. the put in And M&A them scenario. at place Our greenfield look

and actively engaged to we’re M&A. scout out and So, both greenfields continue opportunities, for

Brian Sponheimer

out Ren? of Anything ProSolutions, refer, ProContractor rental I business that what that gone their, made of acquisitions I kind would is outside was? eyes obviously, the and to of what fairway core Gen their guess that be both your say, might some your I core of

Larry Silber

see current our near I new us afield see or completely our geographies. core sort don’t I very to you will you’ll something completely outside of us adjacencies or go put think business won’t current do core. of don’t -- us from that our anything or Yes. into

Operator

next Our from ahead. Tyler from Neil question Go Redburn. is

Neil Tyler

Three from me, please.

whether that think business, actually that the off. you ProSolutions I’ve track contributor the netted a the net on lost growth weather, or events slightly in Firstly, opposing effects the Texas whether to of meaningful were

there been entertainment, sell you the you your customers to Have growth any to able entertainment to back built the in has that relationships, with team referred to of in yet Secondly, base, you. that contributes? you proportion business currently the And could if to we’re if give revenue is the -- Thank of anticipate me you what able a just on entertainment still further -- is cross whom those slice something there. that then, opportunity? or

Aaron Birnbaum

Aaron. do climate business, booms, supplies and with our we Neil, Yes, and that as lighting products ProSolutions equipment this rolling our amount of our aerial a as business that tremendous our rent. entertainment such forklifts cross-selling is we such

sell -- we’re products with cross the with absolutely and there sales we yes, teams. So

Mark Irion

revenue. size, terms And X% of it’s in to the of X% our

a huge an to strong it’s growth year. not but given it the last having unusual fact of it’s impact that swung portion just the business, So from zero year this almost

is So, tail effect the considerable.

Larry Silber

of different your weather unusual and meaningful, normal event. we a And that not weather and weather than not about any overly first Yes. the event, event normally question like was other it experience, sort Texas

Neil Tyler

infrastructure the still Okay. Thank I if discussed a it’s and give you. you I chance referred follow-up administration Biden Larry, not the wonder think where the you as and in to that of plan, forecast was as it call we well. gravy. last

given the As tightness makes in whereabouts do on the so line able on do table, sight its on have to the OEM projects you it? the them, of see chain? enough you’ve to enough you where I to journey to -- gravy you speak, journey described projects And that mean, -- supply be line equip those would have those of sight

Larry Silber

in future. develops, credence ready really enough when will a that far is is it there really I road give And somewhat down projects along it little it’s ever don’t any so to to impact. yet, be news for different UK the And get months is the it until guess, still the I whether than in had then, if ahead me, think prepared. XX and several the the it to are it here. journey Well,

where no and visibility plans, aware Certainly, get mental don’t plans those behind them, I as is wish positive way wish there impact funded would it’s off. hopeful lists, people be. and Look, I every has gravy are excited engineering the we I they it’s having any of think long genuinely a today. think lists. a state the we’re -- But there’s think But and yet. get business So, then until do on the

Operator

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

Steven Ramsey

I the And Do and are that wanted this It expect this little about to year? to bit, appears does headwind? the local a dig still on too, is Maybe accounts the this you continue pricing what accounts. tell the you outperforming of local national through the accounts. rest market? in a national dynamic

Mark Irion

Yes. I’m sure, not Stephen.

I terms XXXX, there. business accounts. this I strength go So, national That year. a dramatic in right? relative any think accounts less I of than think in drop there’s local was of less -- the stronger mean, was should sort -- swing were or in volatile, back there don’t if you to there real that differences around

improvement both. slightly for we’re both. into out So, a environment I positive should think And we generate look slightly sort to rate of positive heading of

that mix sort would our is we balance like a I of XX-XX sort So, guess, that of the It’s be ideal. at good. mix,

trend It sort there. taking accounts, this place certain from here real based of but on quarter-to-quarter around activity there’s We’re in fluctuates certain year. dramatic no change

Steven Ramsey

then the to back has that it on pricing clarify Okay, volumes in great. back also or I on relative levels, Do you’ve side, revenue? the highs, getting see And to then, pricing or for entertainment sort mean pricing pre-COVID you that on discussed the is past, the term? other is And are there entertainment. that that you near Is to the customers, of something verticals. believe some also total at pre-COVID premium entertainment do entertainment -- in

Mark Irion

premium revenue, Yes on it’s and going all well. price above. of the Volume, it’s

Steven Ramsey

strategy more On to flags densifying densify Great. or greenfields areas you And highly to new this of strategy last plant of then the is in intend a pursuing and way current M&A that areas, year? do populated this question. with your you’re strings,

Larry Silber

million focus. think, or Look, in major more, metropolitan been our we with going I Yes. that said that’s since strategy of X around markets the here XXXX, people and ever be is populations have got we to

densify have focus primarily footprint. has markets that I to already where a been our footprint improve and we think,

could we service look gear better business add be as have That add a may we by we just not foothold, to like as greenfield markets that that So, market be to densely into we to at populated market. get density, able to that better some opportunities, a and either service, in way or M&A. of then come of said, we’ll and base look continue greater grow, consider that to that also

Operator

Capital. Ken from is KeyBanc from question next Our Newman

Ken Newman

ability have think how about smaller could can market you to talk on are share fleet you curious, you share wondering to a impacts Specifically, utilization any -- And I’m chain. already just sense little question, a your first supply my whether gain the to industry before So, tight competitors rebounds? real from I’m bit the where as your see you do the feeling market the tighter impacts gains? industry just go if start

Aaron Birnbaum

got fleet our feel early in year orders -- We Aaron, the Ken. confident we year. that for very is we this this Well, feel and

us business to exactly the picks small in the of how going So, the really year. sure seasonality as put to a course answer competitors. through Not the we that’s think up the of strong position

they they’re trouble I think, and getting in probably get didn’t starting now, orders equipment they’ll have early their if year. this

questions get into went we I would unless there, of to orders this think we like of -- that we we what year, end I be, year the exactly were we missed so in ready. but our your wanted something. kind As last I weren’t captured And I sure did felt

Ken Newman

range embedded -- bit what’s a one to know here. But give months elevated obviously, about then, talked prices is, retail I help a shifting final increasing sales used there auction. couple be think sales new us towards used the equipment just you I today? color. more a in been able guidance fleet perspective? and good terms from you’d And us us that’s versus little here here. helpful over you or the about have my in that No, that’s last sense just give of a of can Is

Mark Irion

think of got to consider likely as year. a you’ve OEC, XXXX percentage That’s mean, transition our through in improvement in recovery original I the continue the I from cost. with QX, sort losses -- to a in of gains to

a to up great not volume, then ramping If is us sales. equipment it’s be of terms to equipment down. environment tight, In flat for

maximize in we’ll terms of terms opportunity So, to look probably opportunity limit of in and volume. price

Ken Newman

don’t from last if mind. one you one me, Understood. And then, just

go color some M&A. good just on your ability given some You’ve to more after

going about today. you for Any As kind about leverage especially out there, or are as opportunities good buying how versus organically you we are just of position of actually starts there think where on obviously, size the competitors? kind your really opportunities in improving the a that and cycle, is color of green you think in the out weigh

Larry Silber

of that engage sale all might to activity. that what’s want for on available and in Well, who depends

to left there consolidate. probably know, of are not businesses lot there you out As large a

So, activity branch the is type there. smaller around count companies are most that of out

on of one So, was really nothing in the where as that the questions be. mainstream our big is is of of before, sort with horizon our would mainstream focus

So, I the question. think sort of that might answer

Operator

is Dobre Mig question next from ahead. Go from Our Baird.

Mig Dobre

here, but lot I that I a covered properly. we conceptually Well, just this to want sure understand make

you lower revenue record talked You rental had in about fleet XXXX. than on

implication back a Your utilization guidance or for it. or the utilization the pretty right, guess, have record, to this seems here to I Do year. full something? perspective, at is that for to I assume of close I out low-single-digit going that, all missing record am type me from you’re rental of at that implying rates perspective, be after you’re

Mark Irion

as got so the backwards, is the the move seasonally utilization, get quarter huge. was reset in a -- see Yes. to don’t of it for tough year. that think you a sort I year stronger We right. us. QX dollar mean, is tough into part QX that’s QX step-up I of a going you’ve No,

So improves utilization dollar as ahead. goes the year

and year ‘XX ‘XX. So, certainly at terms utilization over record dollar we’re looking a of in

Mig Dobre

‘XX these can forecast XXXX, in the to to levels I’m and we able of Okay. top of and part assuming a driver that your business presuming And order that to right, hopefully, that in become of the truly wondering for earnings? right, are be this algorithm primarily you to as or need record the growth utilization be grow for rates, XXXX? do concept, going rates further in and of sort think to going we I’m on factor here utilization fleet is But, you’re as about rental expansion in of see that see sort equation. of rental and especially ‘XX, growth line what

Larry Silber

Yes.

cycle the looking And the of We’ve of set to revenue typical we’ve of investing be be move in sort the the would be growth the there. and growth got to cycle, to rebound that. sort fleet the We’ll So, strength platform. as up. got it driving you with through operations do in fleet

executing. We’re

But growth you important our certainly, more all levers are cycle. no, So, volume here. becomes through as moving start the

Mig Dobre

this here. where to I’m And Understood. all is questioning going

your equipment, demand ability from to sort and the in equipment production, I where the is I’m that tightness yet, needed. of CapEx about the talked You ‘XX to going allocation. to sort because, right, that to going be to need that and far to your supply experiencing are to for certain we’re equipment your you’re market get going the that set recovering, But XXXX their to maybe business wondering be market. on is going OEMs think your as I thinking incremental is understand the And is OEMs equipment is of ramp able extent especially place

So, partners your I from you XXXX, maybe ordering your approaching have in you this to what curious, equipment your guess relative year, in I’m regard? hearing And negotiations what you are in in past? are done how for XXXX this the right,

Larry Silber

out utilization quarter a aberration a March and and the XXXX it’s the back time say, bit in off them and the up focused we’ll of future into of they would we’ll is looks at all that of the the I third here think what sort doors April XXXX. demand approaching in and as table, game look well And and and slam is where But where still a what they’re up because pick get manufacturing a early side years at for on happening the spent our of ramping fleet look, I causing what standpoint, year, turned to the supply XX their holds. closed second be quarter on shortages last the the from this bit looks we our what’s Yes. lines, like, an like having moment. coming us

by XXXX, lines will that up running most have deal of volumes ample the with to have and XXXX. major their in and think prevalent supply manufacturers I might capacity be

Mig Dobre

compare QX, you’re assume how your normally looking to just are here. in I’m what relative that would But you’re something Understood. this dynamic you process. to it fair When do Is that you understand to trying planning just in QX at earlier, similar? clarify and to or talking about

Larry Silber

Similar we to year. what did last

Mark Irion

of think, an I We’ve for relationship we’re constant lot place. dialogue biggest guys. these got ongoing the third there’s where taking a customer

done ahead getting getting of demand of demand XXXX, as an in of has tightening that XXXX in of anticipating daily in of team job ahead in continue great XXXX. as excellent the we we fleet -- contraction sort and work It’s terms and and Our we’ll to we’ll a through into do roll harden XXXX. a the job forecasts our dialogue, up for

Elizabeth Higashi

for last time question. one I think, we have

Operator

Actually, there’s no more questions.

Elizabeth Higashi

Well, participating joining have and you today. seeing do all me. questions, don’t thank the if look us any soon. really Great. today. Take further call to we hesitate always, And to for call And you on as for you care, please thanks forward

Operator

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

disconnect. You may now

Herc (HRI) 22 Apr 212021 Q1 Earnings call transcript