HRI - Earnings call 4 2023 | Herc Holdings Inc.

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Operator

Good morning. My name is Brianna, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Herc Holdings, Inc. Fourth Quarter and Full Year 2023 Earnings Call. Please note that this call is being recorded. now call will Hunziker. to I Instructions] turn over the Leslie [Operator

may your You conference. begin

Leslie Hunziker

including our and SEC. operator, Rentals conference Earlier was slides XXXX you, morning, our and year operations Today will our posted fourth reviewing open our earnings The and financials, full IR and XX-K today, and on on were webcast. comments Events website. furnished and with outlook. we're Thank call good view are Q&A. industry quarter XXXX of be Herc the with the page quarter results everyone. filed strategic release presentation All an press of Welcome and our to the our fourth followed our by remarks prepared

harbor Today's are Slide would risks reconciliation therefore, could the forward-looking safe that Now as and statements and the GAAP call materially our and from I actual include statements These let's see on X. move call. based statements. this on we involve made uncertainties. forward-looking environment on to today will differ you on it caution results our

to Risk also XXXX. refer ended XX, annual for the the Form should Factors year December our section report You on of XX-K

be in accessed be our can instructions webcast found the morning. will release in conference evaluating call Replay the that or via financial our on In addition measures the performance. non-GAAP dial-in earnings non-GAAP to company's basis, call we we of through can included closest Reconciliations presented to operating GAAP be believe a equivalent were the is results GAAP in website. replay on materials.A information discussing useful this to this these the

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

Humphrey, Silber, Larry on our Financial Officer; Finally, February now I'm York Vice and conference please quarter: Conference March mark Chief X high Birnbaum, joined America's Senior Industrial London in JPMorgan's and calendars on conferences and President yield Vice in Larry. by this President turn Conference in over of Aaron XX Mark Executive Chief and Miami; morning to on New XX.This join March Senior Industrial Bank and President Chief management meetings call Officer; the Evercore's Officer.I'll three to Operating at your

Lawrence Silber

Leslie, important XX% Slide most on Thank the X. performance sets was data strikes resulted line top X% our from financial the resilient of health performance the care XXXX actors XXXX and and diversification to sector just of nearly and impact advantage morning, more an We centers, diverse a and Equipment inflationary turn adverse XX% market studio level name everyone. writers business Please record growth you, shutdown like few. pressure. end prolonged had of take The energy, the the of semiconductors, robust up to board. revenues. good mix transportation, Strong offset XXXX. double-digit and us another education, as number year record Herc grew rental entertainment pricing in opportunities for in top that rental to of was than the growth on revenue delivered Rentals. supported across remains Demand

or to but fleet equipment. compared oldest more to performance were the became on Cinelease finally basis the we was complete, the strategies until XX% entertainment volume to XXX% chain with Fleet market our margin in can we process substantially There's the EBITDA been backordered represented adjusted sales. moving efficiencies, business, of XX% share you in transaction If ROIC our outsized EBITDA growth a last EBITDA and alternatives Cinelease. number XXXX drag and points have XX first year-over-year. supply the about exclude increased OEC begin increasing focusing available, excluding see rate of the on and higher not to Cinelease, in capturing By explore used to strategic you the announced our In rotating by Cinelease. overall operating lower impacted rental our a a more Slide over studio is Similarly, year-over-year. year. would Reported course.Now for prior In recovered an when would lot and hit fact, XX% XXXX.As XXXX. execution that up of is adjusted fleet exclude high, record successful able in at XXXX the basis Cinelease on X, share half along underway XXXX of industry been have disposals we contributed you'll normal recall plans XXX revenue points adjusted outsized margin growth out year than of relative margin October, new

continue opening scale acquisitions our we we business As network for locations XXXX. invested XX strategic XX and in additionally, up growth, our branch XX locations, in by in key expanding to markets sustainable with completing greenfield

ProSolutions to last especially new demand, conducted our growing correlates capturing culture into with annual the and improvement success of and innovative support reflected wins we catalyst are our range. fleet The at look cross-selling with locations. year, recognize is our our company. high-margin and synergies I We benchmark were And that digital customer-facing the closely our level.In managers. national a capabilities very customer account several quarter, specialty also fourth our employee project that an new address engagement invested closely foundation satisfaction high satisfaction. We the at the survey. results us in They Net our employees top-tier Promoter in to drive employee high metric moves Score This our further the

branch products, any M&A, Finally, operating share the much markets, economies about and portfolio a right in with growing our talk a in and little end right between about we're from that growth. a in systems position time.Now let network, stronger we're me growth Slide history confident on broader thinking scale how X more capital a allocating better balance dividend areas number of Today, and than Herc diverse processes, repurchases, sheet. I'm is investments, the solid at XXXX and a time and of opportunistic strategic fleet

operational share opportunistic North our focus marketplace.Tactically, from XXX geographically acquisition a or to and capture size, our are manageable to benefit continue providers XXXX, America, XX resources one customer project greenfields. expanding with within targets scale in that As giving that continue for more finally, bandwidth can also we'll to and service. the potential coverage the We'll deliver advantage new our largest with opening MSAs we customers; opportunities, superior continue so the and roughly and market top relationships; excellence growth, significant on mega to existing our of those focusing A, are equipment are across us on rental B,

accelerate for strategies nimble, our growth, our innovative we imperative As remain that it's and customers. responsive

tools into the shift is about this practice throughout retail the bit called year. new that XXXX. plan for EXOS putting is of all Aaron will system We'll market of our Our to little goal and equipment in operating a consistently way a for delivering an sales areas talk also we're designed ensure our place that important to value into on continue the company-wide differentiates in service mix in higher-return company EXOS the front. rollout our is marketplace.A used channel progress more

for in to chain TV some deliveries a labor it XXXX quarter year film out-of-season and to see understand ROIC built share over and The of Aaron? fleet high-level metrics priority that, disruptions the will Finally, best-in-class in us, supply provide opportunities operational targets and for and improvement Aaron team clear year. to fourth from margin culture improvement high we're then the the details fourth through strikes and the role financial a of a and walk in we the field our behind the excited is I'll drivers ahead.With members our continuous quarter efficiency have for this is solid, expansion the XXXX. we And operations path turn with who the for for XXXX. take delivering you through the Mark you foundation operating

Aaron Birnbaum

Thanks, Larry, morning, everyone. and good

products is delivering at core while for strategic Our of our well really our to agile Execution do. team and results year safety, served on EBITDA we everything revenue starts geographic our marked with executing I'm continues services record a focus account adjusted always execution, fourth to wins. a by growth and proud quarter the initiatives. safety of course, and conclusion new superior for expansion customers the against way great of as and

in Days. urban rate our locations transactions In of strategy you greenfield Perfect for can the achieved to spent where organization. Equally year at remains in better focuses market branch-by-branch notable, net customers.On As progress total on measurement, Perfect see operations throughout see $XXX cash as high and of Days reflecting that expanding of industry's can of people program on great and commitment incident came We our we Slide Slide seven through our network acquired the recordable and making on those X, on the strive eight last major all we're our internal X.X, four fourth XX you by quarter, our than X, the benchmark we on XXXX, safety top acquisitions, XX% a least of safety to acquisitions. locations. on XXXX, standards XXX% our In locations our million added of greenfield growth days perfect.

opened offering specialty all were new selling capabilities. of and further of high-margin For or XXXX, solution expanding were acquired, our locations XX XX% locations, which

filters.Moreover, and focused the current markets As and the of have in many and opportunities you network the mega projects in announced know, like Ohio, additions States. cultural high-growth we are acquisitions Texas, fit being strategic, our focused are our our United we and where on geographies that in southeastern greenfield financial Arizona complement industrial branch

having strategy now network competency, is process late successfully into XXXX. since acquisition with a Our the the initiating integrated businesses locations core Herc XX in XX

value have to equipment, to these and efficiently customer accounts teams, operations operations. onboarded rapidly companies, We our add

result been opportunities This generating new synergized us a evaluate X.X As X.Xx. gives robust as synergies, we multiples explore of a approximately to pipeline. of in and revenue confidence we've

For XXXX, share with fleet demand expanding million in addition a our specialty to the for key to increasing and $XXX up another opportunities. XX, growing keeping through acquisitions, we acquisitions.On equipment our strategy Slide earmarked new is investments and core have

right You about fleet $X.X the OEC as the billion a page. of can see now total. record fleet on XXXX. Total our at represents fleet of Cinelease the December of composition is XX, side X%

for been about fleet year-end. the when billion sale, So Cinelease would you have held base our $X assets at exclude

[indiscernible]. XX% You'll note represents the specialty that total high-margin approximately fleet of

market. XXXX about a up with makes fleet XXXX. Excluding specialty backordered half just Total see backorder room fleet of year significant overall XXXX for our of production a in half levels, of into back year's XXX%, growth healthy investment XX% expenditures XXXX, can fleet did OEC XX% fleet of fleet job as supply spending allowing you and the close line improve the in the last more half to of the outstanding investments, second chain equipment after XX% amount the for spending. intake deliveries including reflecting fleet timing team growth disposals first an of were ability with comes it between to to fleet grow.When were last of versus the continue chain's The in supply recovered, in last fleet the Herc all of plenty working the gap up revenue used year. we annual XXXX to to the total slowed Cinelease and of XXXX rotation total the receiving

company the sales, sold training record that channel.The we more fleet customers our on capabilities, OEC of XXXX. we amount the force in gain participate a return continue incentives to was traction sales utilizing to for retail used and retail For to at channel in technology, higher

market For in OEC the line growth fleet demand provide expected either more $XXX fleet and cover weighted fleet the million million amount, should sales mega on are by or more that purchases. of our to. typical $XXX fleet for first class. billion spend cadence we high have are planned of incremental to underway at with from That It based to in projects XXXX quarters. of used with also new to This age XXXX, follow disposals fourth purchases threshold year's sight along $X expansion on we to about gross towards disposals year's million probability are fleet the category general should last a range that and greenfields, $XXX planning

second We return production to and now the also the to supply in expect chain to Slide new ramping fleet have more third improved.Turning normal our capabilities seasonal quarters, deliveries XX. schedule up

and fourth the North large revenue accounts, positioned quarter in operating well of to utilities. national the local and needs as through to acquisition as is address education, penetration local which accounts growing of maintenance XX% our and due contractors America. Herc's represented rental regional facility, Local fleet repair and strategy growth greenfield infrastructure, are in in well Our

data revenue national like us market areas that our capabilities reps Long markets. growth are presence by general demand provides from across end continue XX. markets, elevating to our The verticals term, and to for is split and federally accounts.Turning and in equipment Slide and funded to as continuing benefiting we'll to target market centers from a growth strong sales are rental well end accounts local is national XX-XX a diversification segments our Our between customer resiliency. benefit also end up. this of the in geographies opportunities ramping as variety and increase national underpenetrated Organizing enabling XXXX,

the see the gather can infrastructure federal jobs continues build-out projects, These and of for of beginning manufacturing and well mega projects positioned funded opportunities that the here domestic You large Herc multiyear a dollars is space. privately into and to infrastructure mega flow as industrial represent trending steam. the

players capabilities, to largest driving industry, and sets us profit location market's rental the and revenue expertise outpace in rental Slide growth broad broad-based. for management on XX, our in of the capacity, As XXXX on-site the our up increasing growth.Finally, projected are digital opportunities fee network one margin

expect the capture the in continue We ramp-up mega project expand to to tailwind share. to

proprietary leverage and our told going means locations year market, Larry ensure data the demand. fleet efficiency, industry value-added to be that you one remains we're to fleet in going allocating of our that services and benchmark tools, resilient. this managing buying to geography are fungible to our priorities pricing optimally laser-focused project greatest and those with that is We

also through and are going scale Of greenfields continue course, acquisitions. build to we to

us in year first continue and locations productivity business will our new to enhance excellence continue to Being Several operational acquisition the e-commerce, EXOS rental want supplier an do experience. greenfield and have overall quarter.We'll openings to choice. do expert pipeline what for we first their our customers' rental another for identified to to opportunity NextGen and experience. with make to Herc the leverage logistics I customer team and efficient of at equipment thank commitment easy Their ProControl professionalism in services the processes been to And a completed HERC.Now they for system the on the safety. strong. day. of already I'll have remains to are business and every up pass elevate year valuable and customers single management in our We shows also our differentiator the call the Mark. this industry-leading standardize and to is execution

W. Humphrey

the on with just starting XXXX everyone. to a Thanks, on our key some I'm quarter. the Aaron, full fourth and good morning, fourth on summary touched Larry going line of Slide for metrics quarter. color XX the year items, I'm so provide

flow-through increase points about For X/X acquisitions. DOE REBITDA SG&A the from improvements was XX%. in was XX REBITDA point basis rental revenue, rental and The basis percent came revenue of a supporting of as XX% and adjusted the growth of in margin roughly improved year-over-year. quarter, X/X a of organic margin XX a and adjusted

Let's of walk XX. Slide drivers performance other through key some on the

utilization leverage drag the adjusted XXXX flat quarter. a margin Cinelease, benefit and basis was benefit EBITDA excluding continued the with typical profit than the percent comp. give lower fleet fixed on on the and sense in especially weather from compares financial waterfall brought at weakness revenue quarter despite weather than approximately associated as EBITDA fourth resulting of higher the events. earlier, year-over-year. was Ian strike adjusted XQ difference is performed rental a of revenue the unit the no benefited up back line and from year-over-year, the right, end about offset, Mix In fourth weather-related of revenue Cinelease accounted measured excludes November was accounted In of OEC workers rental used from quarter, well less in fleet the of Hurricane Adjusted Hurricane a entertainment from chart, typical the year made as base revenue, than tough adjusted had difficult the to XX comes and fourth in from was as quarter sales.Our XX the business was rightsize studio we comp Also, Similarly, fourth top the of a lower and of XXXX. mix adjust in increase the roughly offset of ramp. XXXX typical impact generating we the year-over-year to reflecting in in dollars October, rental X.X% recent XXXX EBITDA expected, new both revenue the year-over-year fourth studio result that of quarter the a higher in benefit full studio to When base its a for a the Comparatively, to the XXXX quarter on XX%, XX% X.X% revenue, drop-off the more X% the Xx expenses rental and XXXX year-over-year. in off and the chart inflation. fleet and also well basis the XQ points Here, rate as dollar EBITDA catalysts, as mentioned double lower revenue, increase in significant weather-related up the with from was quarter Inflation no in was points, XXX on margin furloughed partial typical operating how revenue year. summary rotations XX.X% but the in the see which to the headwind approximately in a for revenue as a XXXX higher impact fleet volume increase X% entertainment had in rent. for to equipment fourth primarily you walk it an for onboarding higher XX.X% better quarter season.Moving to inflation of of on entertainment's Slide fourth can increase you the but cost quarter periods order of OEC as impact.As we mix a major without XXXX Ian the about due results

our see rental by in per continue have growth XX basis into points In basis the XXX we in to reconciliation the capital $X.XX in expenditures you $X.XX result X% Slide the this have excluding represents raised be ample million annual from metrics, For or for the acquisitions. share. than Last are no level before revenue of and than our cash our our stronger actual appendix of $XX declared to can year. cycle. the to of dividend $X.XX allocate points Full XXX presentation.Shifting growth management goals Slide invest in prior performance better the operations and XX, confident was Net REBITDA already fund on liquidity increasing per $X.XXXX, studio can to quarter, on XX.X%, per value. record capital is quarterly We year. we drive with to example, found fleet share as points fourth quarterly XXXX, our and would XX higher of flow more maturities remain outflows we cash of basis fourth week, at near-term flow-through business in which which quarter been a to ended year the approximately than with model XX.X% business growth that share shareholder we dividend and a margin our capital entertainment XX, exceeded committed December

on XXXX range revenue estimate Xx upper well X.X% end XX, strength growth is and ratio leverage target you see primary the industry invest in to ARA or American In the billion line is as continued to North with our our X.Xx expectations within rental for X markets. current left, XXXX. in over $XX Slide can growth.Moving at the we our in Our

Architectural the back trend similar future index the not year. XX December. below On activity. XXXX.ABI the just saw of in It's unusual the the in which reported is Billings be half of to Index, choppy see bottom is We billings left in one indicator construction a

markets are Two $XXX over U.S. private Combined, nonresidential these the Info customer it steam.Taking the and to spend. is Dodge's likely of continue our due data construction. about with both at to X/X forecast a second billion $XXX right, of will projecting next end consumer-driven conjunction gather and Industrial key forecast nonresidential lower on XX record for base We to other continues level manufacturing of new right top capacity last outperform markets of at construction mega billion months. is monitor other markets to In industrial on as points Resources highest XXXX are reflect starts. and reshoring in top the industrial look construction the on on quadrant year's spending the the peak our

dotted starts charts estimated increase The to on billion. You of growth both X% these in line levels. to reflects can XXXX, over see pre-pandemic are $XXX

are year of ever the You can projected X next see and industry the strongest be to periods that years has that this seen. last activity

infrastructure for projects our Additionally, that's to slated see plan to over there's you continue another in guidance can increase flip $XXX billion again outpace you Slide XXXX.If highlights XXXX, a in that XX, XXXX. growth to X% our market

an close As and basis which and to is expected on performance is the guidance excludes of organic for is XXXX. held noted, in presented Cinelease, sale

Our at $XXX advantages is between to our million, the to equipment to improvement organic X% revenue where moderate change. utilization OEC will we net like young optimize level. fleet Used XX Last supporting catch-up to marketplace by growth. us and for age, flexibility be allowed conditions sitting, us XX% months.Our fleet $XXX rotations we in and if the rental gives fleet year's XX% to disposals intention versus market and equipment XXXX XX% XXXX dollar million are in currently CapEx

impacting field.While project We XXXX projects about our inflation of has initiation opportunities based course, good range normal reasonable current the about this greenfields for visibility, revenue We is market new trends on which in total guidance our is feel exited of is X%. for intended on rollout, range to increase. and, purchases as mid-single-digit more well moderated, pipeline. in pace Herc-specific by the incremental to rental our XXXX Our a based approximately the the in and the market experience price of X.X% local projected a XX% X% equipment mega on return it growth with more from XXXX growth mega fleet at as provide with from to team feedback the our growth,

versus For and XXXX. Overall, goal will the industry EBITDA for upcycle, to guidance growth with $X.X representing any EBITDA X%.When strong expectation leverage, pressure. proven that, growth strong another of is demand Benefiting metrics pricing on reflects estimate the from with comparing billion, rate, profitable the to adjusted and be growth sales back our $X.XX we're operating turn and equipment difference X% between we adjusted and rate financial the experiencing to XXXX, used as we inflationary across that is offset markets, from We consistent billion XXX our that. from our Larry. with point industrial infrastructure a the of comes the I'll execute maintenance stability to is to for continue growth ranging call lower intend and our roughly strategy.With revenue manufacturing, commercial along equipment basis projects industrial an amount year the an deliver

Lawrence Silber

do equipping build achieve XX. do to results, together, Thanks, take operator, Everything that, ourselves Slide our Mark. and a values And purpose a that customers and please now With responsibility, with and turn we first on our focuses and mission starts day. question. we we're communities statement our to vision, prove in every what's brighter we'll take right, we we this future. We

Operator

Your Instructions] Steven from first Ramsey with comes Group. Thompson [Operator question Research

Steven Ramsey

of growth the recently past have revenue a the It local positive to to it's XX% of X.X%? Maybe come like with business, the outlook step growth a about market local and talked but mid-single-digit range growth, the assumed markets from kind prior the looks of those slowed for national periods. to couple in guys. split market quarters maybe start local Maybe you XXXX where may growth down market versus and two the talk given versus the on for

Aaron Birnbaum

Yes, is Aaron. this Steven,

very new branches to really that for strategy density that investment there continue in local And business markets. growth sales investments and week the our those are talking a focused to us field acquiring our see We all greenfield grow in for teams our on market in -- our as of XXXX. Our in the they're vehicle customers. every to local is be acquisition out the

strategy, will So big and think it's we of that part throughout the entire year. a our continue

Steven Ramsey

bringing year Okay. similar What Helpful. past this and thinking does pricing to at to impact both impact years years, of new averaged acquisitions strong kind And the of couple was expect I'm And companies million is you just XXXX? expected. then of these executed of over of in how in pricing your in past pace you acquired a on that the getting out how do over the couple $XXX pricing contribute years? with for

Aaron Birnbaum

think Yes. I time mean, I below acquisitions et of numbers. generally of probably pricing, cetera, [ our right? the So ut, consolidated speaking, typically, are sort revenue-based that synergies, are

get what their hold Herc all-in, see the consolidated that's to up or and to opportunity there's on we probably takes probably pricing So a year sort acquisitions, Stephen. opportunity is pricing we so as of think about those I think it

Operator

comes Rob Melius question with next Wertheimer from Your Research.

Robert Wertheimer

like you're the on the XQ time thought now? different utilization? this a to and you a normalized disrupted And you just to. guide are XQ, going of at My Do the this coming Just for willing to you you have fleet. But with the that. a room if the where with off things your equipment ut first that Cinelease level year in on coming minute, schedule question on year, what and in get do ability are lot of more There's is is and could out and COVID off versus then just equipment improve embedded time times? about you talk and/or general, at in with

Aaron Birnbaum

Great Yes. question.

last right, XXXX, too think hot, XXXX. of I couple think years, back dynamics the supply in you when over chain

those our think we Aaron to what be between about as about when where that's somewhere kind X the And fleet you those think talking of was of sort about drive think If goalpost, is for think and years. XXXX efficiency. in the I middle I

think other million when I have to of $XXX-or-so average point in-fleet to XXXX, that the fleet is I our put really for fleet work. would you about at make you look

almost efficiently work we're about that's in thinking XXXX. more So XXXX that the embedded of fleet by but lines along put we as in fleet XXXX, more to your fleet by that

Robert Wertheimer

helpful. And And of industry bit but pretty price That's positive super that needs get spend And more have cash the probably then bit a grow. of to margins companies a private flow high. to is companies, one that Okay. inflation in can an is factor the Smaller this may of lower to of rental be we one the to even thought and you oddball, was a things or fleet. so need order plenty may companies, price larger have guys rate. you on

guys lot of at look acquisitions. a You

You've What locals kind to your done I you ability regionals on fleet you inflation acquisitions. of environment? on a lot see do mean, in of what equipment in seeing are terms, this grow real their and

Aaron Birnbaum

they diligence Aaron was it. fleet. they But it's acquisitions they don't took they Rob, to a to XXXX-'XX, rental have their sticker to shock we've them And think a finally pricing it long to again. but The get were get rate. most in that and had paying fleet, their while took it They with, in fleet, right? them get might order involved So been start that Yes, adopt cases, the they time they to have fleet get the have the systems to very higher do or the elevated. slow were I the fact a did

point. base trying of to a their muscle type memory So of there. customer execute to to of kind that But accustomed kind price certain often, they're was just find

to with, think but So that in them, fleet it we're but with. dynamics pricing was challenge the them, come they for a I clipped started finally the struggling really were really for

W. Humphrey

I elevated their other to that pay environment healthy for point think, end and and I there, support does pricing, on XXXX. too, elevated for that disciplined interest a would is Rob, the right, make elevated then pricing pricing rates

Operator

with Your Sachs. Revich Goldman Jerry comes next question from

Jerry Revich

from thinking But expand was I'm obviously, wondering much should year, if on Cinelease, you the about we'll -- about business. the versus fair 'XX could the drag the then just we tailwind basis flow And given points, fleet? guidance as cash we're than quarter, proceeds come what plus the of discussion can Cinelease the the divesting that's of shortfall dollar potential on versus out proceeds, assets for the 'XX the last Cinelease, think there free the versus utilization this million. is, higher glue one obviously, that is be deleveraging see to the the utilization of just to I'll dollar in on in and talk are. about point given X M&A the about fourth to a midpoint natural good $XXX you how it X.X The related

W. Humphrey

bunch Jerry. All to those. all right. was a There try unpack I'll there, of

of terms Cinelease impact the of the business in in First, overall of sort XQ.

that give probably Page there or the bottom the call of in think XXX basis from a and think XX about that is year-over-year impact dollar a Cinelease to perspective. think points, just And core of honestly, XX standalone ut dollar $XX hiding Cinelease. -- that EBITDA you of in split basis, the just at fell has through deck XQ And look business. you was quarter through a I I impact the it when sort If with by take. the about, first, is the of some performance guess business maybe you utilization sort without of XQ of million perspective, I on from when quite want and But just it,

the that And reasons, XXXX so going in Jerry, one sans to guidance of Cinelease. we're that's

like, of the is take it. getting and at core of we way So like-for-like view little the level a a it updating to bit at right think may models the look but sort

the out. isn't XXXX, take ut that So of mitigate core the as adjust there you to for does of there once of a some variance dollar sort utilization Cinelease jump you when dollar big your

Lawrence Silber

As -- of will the initially And then reduce we'll it's it roll when into pay go normal the and our capital use business our exposure we'll ABL utilization completed, far there. down from our to sort proceeds as of the in of business.

Jerry Revich

looked Super. this back and normally sequentially? and talk what in the year just Can pricing and one a we just sequential if October, give November that some Okay. price cadence, looked you more comment can into about December. I on industry you in can increase we how like the get January, ask pricing in Mark,

W. Humphrey

And question, Jerry. be exit posted we goal the goal other us the I that's inflationary fourth -- mean, a quarter. our through we And month the mid-single-digit improvements the the for is we've is to sequential quarter, January, that good Yes. range. X.X% we'll think that each only obviously, stated in pricing, the as that for pricing would point and No, XXXX. of fleet takes I of negate I reflected make impact the

Operator

Your next question comes from Seth Weber with Wells Fargo.

Lawrence Stavitski

is to some talk project This about does you the projects couple specific How if pipeline? Seth the the that for the these process, if years into morning. ago? Stavitski you this are your and traction visibility And geographies Larry on I could projects, a competitive of want that compare of mega just in what's ask to about your into will?

Aaron Birnbaum

month. the mega healthy. It's plenty every Larry, still is Yes. coming out of arena starts

kind it's that. And on a many dates, of give I would with of quarter last You of And coming that right in in see takes kind track of some the year. are seems sectors and a challenges first start the plenty months But labor, about super talked mean, as at big now were coming I XX on there over We permitting. say of all It that. this basis. for monthly that we out. of the the there's healthy we about starts is getting the sometimes see projects talked though environment

So I the vibrant, a think for it's environment arena. mega very strong

Lawrence Stavitski

what that? talked AWP still Got we little holdups And Okay. but some guys a there? on you to bit supply expecting Can about some pieces. some still you more 'XX? chain loosening expectations Are you. up, constraints for with see are And your elaborate

Lawrence Silber

come to near back Great question. vendors somewhat by the in access work similar chain Yes. majority supply the particular, meaning to say, platforms, operating kind of and normal still to us deal in this dates like get not extended they everything are season. still delivery we're on with get are reliable to to times. lead give They've be but going certainly -- have a for is metrics that vast able reach aerial major bit we'd the normal certainly XXXX. we or I'd more area, forklifts, of large, and In when

hopeful discussions will all close Latin particular, what come supply some of their and that our So But in to have place improving. meaning or that we're we're forward plans looking back resource I'll for that We'll as in them, better we'll in operate a with put constraints Mexico, and in them America call, have stronger. XXXX. in their, somewhat plants, improve with that from area

Operator

Your next question comes from Neil Tyler with Redburn Atlantic.

Neil Tyler

least your in X the of medium-term CapEx all to more in better provided questions influenced you intervening ut on opportunity time things to for wonder and of CapEx September. those if of the next me, answers you the sort that together the your outlook previous market drive fit back from how One you're XXXX, X you anticipating at some guide into cadence around have that end thoughts year. gave sort I sort months And framework could since for sort please, of are the the the the for around of and or medium-term of guidance? trying

Aaron Birnbaum

knowing in right, I efficiency we've mean rental fleet you well to utilization fleet think into perspective. as that for, I full with from the fleet X well a time both XX looking Yes. and year, that takes your you gains we're needs start of from revenue that as the guide, got that sort for

$XXX billion not the update we So guide not CapEx saying that to change. That's you that's of gross we're be-all, $X million and spend. I that things if will -- the implies end-all think

what last question, so the of And part your Neil, around -- was

Neil Tyler

market it you space has anticipated would. I it end suppose out Well, has [indiscernible] panned had broadly really, as the just the

CapEx And what the lower sort looks for optimism end around like opportunities more markets. efficiency of less than reflect expectations of sort

W. Humphrey

I don't it's statement end on think a Yes. the markets.

us I more demand it's normalizing, end think are wanting fleet is a efficiency. statement markets strong. say on to would I obtain

efficiency and it's prudent perspective. than diligent so, And anything us I don't being think more from fleet a

Lawrence Silber

themselves would becoming are Neil, we OEMs shorter I a time always normalized a And to with a lead demand, lead perspective. that, there the times, on get and gear having in shorter shorter more from if or interval add spikes Yes. can basis

months Sometimes opposed the or past. matter we within weeks or a get in of as to days it years can

OEM our really So sort moderations in with end-user of ability a market. helps any supply chain the normalized

Neil Tyler

broader able you that the place? initiatives sticker that industry just to is in your it. sense to that only think of you you're to Aaron, your see pricing Do of thanks of more sort Got outside the take talked had I acquired smaller those of market, that the is of -- that shock cost faced. for of sort the pressure? about constructively the Or back you've onboard come gave, upward businesses then on sort that some apply sort end when help But you outside that the the the experience, acquired really to And businesses think is of come your in responding you businesses. and of you changes those to that outlook

Aaron Birnbaum

And in the normalizing, I I manner. the a No, disciplined to and -- as industry think a it's as Everybody the think getting far in but markets on way. understands Mark trying is returns everybody but capital, is healthy as the solid, operating are entire act cost said, capital. disciplined of they're

Operator

Ken from comes Your Newman next KeyBanc question with Capital Markets.

Kenneth Newman

the the approach move pieces the is about this, ut I'm about a all Does sorry think I cadence of Just but the that going year think that if just wanted of year? given put just dollar back, the there modeling to to probably core you a number to think difficult? right way XX% change too mentioned go a that we is is you through metric up business mid-XX or how I way Mark, moving forward the missed quarter. this of by about think the as little You for last end Cinelease.

W. Humphrey

watermark just uts of year, the efficiency will XX.X% the that think average We the be that as the XX.X% fleet I improvement seasonality will I the XQ in dollar XXXX improved at cyclicality is finished right? No. this from the guide of for -- ut sort an obviously, Your within internally. high in XQ putting And we of said I core. think, year. the business and in sort metrics anticipated be we're or dollar year XQ and mean

Kenneth Newman

Got it.

on not I to to know we're expect clarify, Cinelease, on income set That's Okay. of And hard we're for level into Obviously, statement sell the kind that to ops curious, of then here an it's to But discontinued more in you expecting timing put I'm helpful. follow-up, when going asset. question, of is 'XX, down just I pin that accounting the that a, my so correct? for more the of expectations. just this clarify, all to guess, to

W. Humphrey

will I available right. mean, it that's sit as out sale. No, for there

we're of providing we'll while think we'll and GAAP, not report is XXXX. I into until view as move GAAP the have guide a core Cinelease business as that our it books, QX for we forma walk reporting our we off pro more of way inside

Kenneth Newman

So make any impact, just guide? your expect in recovery exclude of apples-to-apples with if you should a it would to there kind was that we centiles

W. Humphrey

That's We'll apples-to-apples. on report exactly right.

Operator

from comes with question Mig next Baird. Your Dobre

Mircea Dobre

something net to a target CapEx. question I my $X on Neil that CapEx. ago around substantially your trying that baked want for mind implying annum moment go to what's lower. XXXX, of because Obviously, to I remember billion out set kind little you're back for I'm into asked guiding wrap north of a of you XXXX per a that's

Why are than in questions XXXX? did So less I happening you're you guess the investing then, two is And that here. second, what where areas first?

W. Humphrey

our of -- guide, on to to XXXX. was X-year sort on guide growth current for average Our guide X-year a XX% that right, the period, based XX% that here rate set in XX% mean I I is visibility right? Yes. think into range the X%

at of the so, is number lines that you overall was of the like period, the a fleet ] to guide from and [ I think over million back to $XXX midpoint X.X-ish Investor $XXX X-year more think implying correspondingly, this at if guide. sort And something million Day, along the of November the

to is X. really XX%, XX% Mig year to it and that's is X% the the difference versus there So XX%

Aaron Birnbaum

second of last second areas part manufacturers really And areas, much a -- get the as your want, fleet us we've we that mentioned the Mig mentioned. question those in. that want we enough investing the as can't the less of we had where Larry access and handling aerial I material can't provide as you -- about we're think in of part hour the previously that

as as we could, if areas some get those but can't where are the So we just we more we would much of take want.

Mircea Dobre

coming So from? or some is areas that maybe investment the specialty other earthmoving lower maybe where would imply that is

Aaron Birnbaum

that obtain material more could invest if handling, would No. more access just there. No, we aerial we

Mircea Dobre

or sort of Okay. obviously lot on the couple Then the growth is of mega change we're final about I years, for But a much been versus that even been mix, infrastructure we're talking national and past sort I contractors verticals, projects. versus of I the versus see. industrials local, within can question if look hasn't your other at and there business understand. your itself. about me mix There's talking of

couple the of to would curious, next business sort mix expect you do that way? continue of change the over remain in I'm So years to constant any or

Lawrence Silber

are any our of verticals. similar event to of to we're remain business relative an downturn, segment balanced of all trying or in not dependent we ever and verticals going that type ever the well across Look, one there's our go all to if be diversified board so down, we're on one some our grow causes at of a pace to a that

advantage that So opportunities able I be marketplace adjust other hot take don't anything implies growth that than of business the markets. think dynamics is and to changes and and very balanced on nimble very a

Operator

comes with Raso final Your Evercore ISI. question from David

David Raso

the CapEx, a But average I the it, normal, call the revenue including CapEx the of the XX% rental except back revenue. when rental sort back at net prior last percent you're guide, X rental XX%, net the guide sort X, seen of On rental to, you're years, to to year. years, right, is your of in in for it as the XX lowest of we've your look pandemic initial right,

be you're be I should sort get XX% little aerials. it. hey, has you're about if the just And changed. go yes, into the CapEx about rental The OEC baked So just normalizing we net margins we're revenue rental how your revenues, it. at can a sales think of just to us how growth for thinking clear, to framework, still like we help of percent 'XX, used used higher just 'XX missed you equipment of just if you 'XX maybe sounds sure that when that make on saying, maybe sold. curious the a in those also But could is nothing then looking And margins. more for it and being sales, And think to it about XX% could we the guide, as

W. Humphrey

Yes.

take the one So I'll first. second

for On I you I out in sales of we that's from of side, coming I think a sort OEC sort look it's probably out implied retail And $X.XX more think, the that perspective. a shift through slightly disposal into with, wholesale of we dollar about the every equipment think that closed auction really guide, mix. the if on used north channel as And about guide right, of focused and of the year XXXX.

perspective. proceeds I slight think that's of a increase make Does an supportive that sense? OEC from

David Raso

did And margin the I apologize margin the I on that? assumption. miss Yes. comment

W. Humphrey

Yes. have percentage you some down, right? I a would your XX% between mean selling somewhere got number slight revenue I'm going XX% of -- increase you've in as Obviously, in go year. your margin. and XXXX, that is last to

lift some from mix get you'll there just a perspective. EBITDA So

Lawrence Silber

let And sort me of the guide. partially CapEx take

rental up always have chain can we X a the ramp And than reshoring and into visibility side. You're some our on been certainly healthier visibility mega we're supply we multiyear good revenue over intake projects, up they're as much ability going the always environment. projects our the now, projects, over the CapEx of short more because -- very years, absolutely over correct, these last term. we improvements is And experience to improves ramp And that and is as to the time. they're and normalized it's

David Raso

sense rental 'XX, net you you of get willing if expect that growth and 'XX, say to to trying 'XX in to rental just I just rental XX% I just to sure whatever about the making think revenues. is. curious in I below confidence was CapEx above 'XX guide. a were kind Yes, should but trend rental in have expect I'm of if XX% CapEx you're normal revenue 'XX not the trend that you I'm of this a you to normalized, your to you think net from no, beyond because below give It's like, hear XX% CapEx

W. Humphrey

don't I unreasonable. think that's David,

reasonable think assumption. that's a I

Operator

questions further at over will time. the turn now are no There this call closing I Leslie any remarks. to back for

Leslie Hunziker

quarters the for come. We us to look on today. to in our joining on the you forward updating Thank progress you call

please have if any further don't reach course, to us. Of day. hesitate a Have questions, you out great to

Operator

conference. This today's concludes

You may now disconnect.

Herc (HRI) 13 Feb 242023 Q4 Earnings call transcript