Attached files
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| 8-K - 8-K - HERC HOLDINGS INC | a8-kearningsthirdquarter.htm |
| EX-99.1 - EXHIBIT 99.1 - HERC HOLDINGS INC | pressreleaseq32016.htm |
Herc Holdings Inc.
Q3 and Nine Months ended September 30, 2016
November 8, 2016
Agenda
2
Welcome and Introductions Elizabeth Higashi
Vice President, Investor Relations
Strategic Update and Industry
Outlook
Larry Silber
President and Chief Executive Officer
Q3 and Nine Months Financial
Review
Barbara Brasier
Senior Vice President and Chief Financial Officer
Q&A
Larry Silber
Barbara Brasier
Bruce Dressel
Senior Vice President and Chief Operating Officer
NYSE: HRI
Safe Harbor Statements
Basis of Presentation
The financial information included in this presentation is based upon the condensed consolidated and combined financial statements of the Company which are
presented on a basis of accounting that reflects a change in reporting entity and have been adjusted for the effects of the spin-off from The Hertz Corporation.
These financial statements and financial information represent only those operations, assets, liabilities and equity that form Herc Holdings on a stand-alone basis.
Since the spin-off occurred on June 30, 2016, the financial statements represent the carve-out financial results for the Company for the first six months of 2016,
including spin-off impacts through June 30, 2016, and actual results for the three months ended September 30, 2016. All prior period amounts represent carve-out
financial results.
Forward-Looking Statements
This presentation contains statements that are not statements of historical fact, but instead are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. We caution readers not to place undue reliance on these statements, which speak only as of the date hereof. There are a
number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those suggested by our forward-looking
statements, including those set forth in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016 (the “Second Quarter Form 10-Q”)
in Part II under Item 1A “Risk Factors”, including:
Risks related to the spin-off and our separation from Hertz Car Rental Holdings Company, Inc. (“New Hertz”), such as: we have limited operating history as a
stand-alone public company, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate,
publicly traded company for periods prior to July 1, 2016, and may not be a reliable indicator of our future results; we continue to incur significant charges in
connection with the spin-off as well as incremental costs as a stand-alone public company; the loss of the Hertz brand and reputation could adversely affect our
ability to attract and retain customers; we may experience increased costs resulting from a decrease in purchasing power; the liabilities we have assumed in
connection with the spin-off could have a material adverse effect on our business, financial condition and results of operations; we may not achieve some or all
of the expected benefits of the spin-off and our assets and resources may not be sufficient for us to operate as a stand-alone company; if there is a
determination that any portion of the spin-off transaction is taxable for U.S. federal income tax purposes then we and our stockholders could incur significant tax
liabilities, and we could also incur indemnification liability if we are determined to have caused the spin-off to become taxable; our ability to engage in financings,
acquisitions and other strategic transactions using equity securities is limited due to the tax treatment of the spin-off; if New Hertz fails to pay its tax liabilities
under the tax matters agreement, we could incur significant tax liability; the spin-off may be challenged by creditors as a fraudulent transfer or conveyance; and if
the spin-off is not a legal dividend, it could be held invalid by a court and have a material adverse effect on our business, financial condition and results of
operations;
Risks related to the restatement of financial statements previously issued by Hertz Global Holdings, Inc. (in its form prior to the spin-off, “Hertz Holdings”) and
material weaknesses in our internal control over financial reporting, including that: we continue to expend significant costs and devote management time and
attention and other resources to matters related to the restatement; the restatement could expose us to additional risks that could materially adversely affect our
financial position, results of operations and cash flows; we have identified material weaknesses in our internal control over financial reporting that may adversely
affect our ability to report our financial condition and results of operations in a timely and accurate manner, which may adversely affect investor confidence in us
and, as a result, the value of our common stock, and we may identify additional material weaknesses and significant deficiencies as we continue to assess our
processes and controls as a stand-alone company in the equipment rental business with lower thresholds of materiality; and the restatement has resulted in
government investigations, books and records demands, and private litigation and could result in government enforcement actions and private litigation that
could have a material adverse impact on our results of operations, financial condition, liquidity and cash flows;
3NYSE: HRI
Safe Harbor Statements - Continued
Business risks could have a material adverse effect on our business, results of operations, financial condition and/or liquidity, including:
• the cyclicality of our business, a slowdown in economic conditions or adverse changes in the economic factors specific to the industries in which we
operate, such as recent declines in oil prices further negatively impacting the upstream oil and gas industry and extending to other markets we service;
• the dependence of our business on the levels of capital investment and maintenance expenditures by our customers, which in turn are affected by
numerous factors, including the state of domestic and global economies, global energy demand, the cyclical nature of their markets, their liquidity and the
condition of global credit and capital markets;
• intense competition in the industry, including from our own suppliers, that may lead to downward pricing;
• any occurrence that disrupts rental activity during our peak periods given the seasonality of the business, especially in the construction industry;
• doing business in foreign countries exposes us to additional risks such as those under anticorruption, competition, economic sanctions and anti-boycott
regulations;
• an impairment of our goodwill or our indefinite lived intangible assets could have a material non-cash adverse impact;
• our success as an independent company will depend on our new senior management team, the ability of other new employees to learn their new
roles,and our ability to attract key personnel and to retain key members of our senior management team and other key personnel;
• some or all of our deferred tax assets could expire if we experience an “ownership change” as defined in the Internal Revenue Code;
• we may experience fluctuations in our tax obligations and effective tax rate;
• changes in the legal and regulatory environment including with respect to taxes, consumer rights, privacy, data security and employment matters could
disrupt our business and increase our expenses; and
4NYSE: HRI
Safe Harbor Statements - Continued
• other operational risks such as: any decline in our relations with our key national or industrial account customers or the amount of equipment they rent
from us; any inability to accurately estimate future levels of rental activity and adjust the size and mix of our fleet accordingly; any inability to purchase
adequate supplies of competitively priced equipment or to collect on amounts owed by customers; our equipment rental fleet is subject to residual value
risk upon disposition; we may not be successful implementing our strategy of further reducing operating costs and our cost reduction initiatives may have
adverse consequences; we may be unable to protect our trade secrets and other intellectual property rights; we may fail to respond adequately to
changes in technology and customer demands; our business is heavily reliant upon communications networks and centralized information technology
systems and the concentration of our systems creates risks for us; failure to maintain, upgrade and consolidate our information technology networks
could adversely affect us; the misuse or theft of information we possess, including as a result of cyber security breaches, could harm our brand,
reputation or competitive position; we may face issues with our union employees; we are exposed to a variety of claims and losses arising from our
operations, and our insurance may not cover all or any portion of such claims; environmental, health and safety laws and regulations could adversely
affect us; and decreases in government spending may have an adverse effect on us;
Risks related to our substantial indebtedness, such as: our substantial level of indebtedness could materially adversely affect our financial condition and ability
to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry or materially adversely affect our results of
operations, cash flows, liquidity and ability to compete; the secured nature of our indebtedness, which is secured by substantially all of our consolidated assets,
could materially adversely affect our business and holders of our debt and equity; an increase in interest rates or in our borrowing margin would increase the
cost of servicing our debt and could reduce our profitability; and any additional debt we incur could further exacerbate these risks;
Risks related to the securities market and ownership of our stock, including that: an active trading market for our common stock may not be sustained and the
market price of our common stock may fluctuate significantly; our accounting and other management systems and resources may not be adequately prepared to
meet the ongoing reporting and corporate governance requirements; the market price of our common stock could decline as a result of the sale or distribution of
a large number of shares of our common stock or the perception that a sale or distribution could occur; and provisions of our governing documents could
discourage potential acquisition proposals and could deter or prevent a change in control; and
Other risks and uncertainties set forth in the Second Quarter Form 10-Q and in our other filings with the Securities and Exchange Commission.
All forward-looking statements are expressly qualified in their entirety by such cautionary statements. We do not undertake any obligation to release publicly any
update or revision to any of the forward-looking statements.
5NYSE: HRI
Reconciliation to GAAP
In addition to results calculated according to accounting principles generally accepted in the United States (“GAAP”), the Company has provided certain information
in this release which is not calculated according to GAAP (“non-GAAP”), such as Adjusted EBITDA, net revenue earning equipment expenditures and free cash
flow. Management uses these non-GAAP measures to evaluate operating performance and period-over-period performance of our core business without regard to
potential distortions, and believes that investors will likewise find these non-GAAP measures useful in evaluating the Company’s performance. These measures
are frequently used by security analysts, institutional investors and other interested parties in the evaluation of companies in our industry.
Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may
not be comparable to similarly titled measures of other companies. For the definitions of these terms, further information about management’s use of these
measures as well as a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures, please see the Appendix to this
presentation.
Herc Holdings does not provide forward-looking guidance for certain financial measures on a GAAP basis or a reconciliation of forward-looking non-GAAP financial
measures to the most directly comparable GAAP reported financial measures on a forward-looking basis because it is unable to predict certain items contained in
the GAAP measures without unreasonable efforts. Certain items that impact net income (loss) cannot be predicted with reasonable certainty, such as restructuring
and restructuring related charges, special tax items, borrowing levels (which affect interest expense), gains and losses from asset sales, the ultimate outcome of
pending litigation and spin-related costs.
6NYSE: HRI
We aspire to be the
supplier, employer and
investment of choice in
our industry.
Q3 2016 First Quarter as a Stand-Alone Public Company
• First quarter as a stand-alone public company
since we separated from Hertz
• Began trading on the NYSE on July 1 under the
symbol “HRI”
• Branch locations rebranding to Herc Rentals to
be substantially complete by the end of
November
• Successfully running the business as an
independent company
7NYSE: HRI
Financial Highlights
8
Q3 2016 Equipment
Rental Revenue
• Reported $360.3 million in the quarter
• Excluding operations in France & Spain and impact
of foreign currency translation1:
+ 7.2% YoY in key markets2, which represented
84% of total
+ 1.4% YoY overall
Q3 2016 Pricing
+ 1.8% YoY in key markets2
+ 0.5% YoY overall
Affirmed
Full Year 2016
Guidance3
• Adjusted EBITDA:
$520 million to $560 million
• Net Fleet Capital Expenditures4:
$375 million to $400 million
NYSE: HRI
1 For a reconciliation the most comparable GAAP financial measure, see the Appendix beginning on slide 23.
2 Key markets refer to markets we currently serve outside of upstream oil and gas markets.
3 Herc Holdings does not provide forward-looking guidance for certain financial measures on a GAAP basis or a reconciliation of forward-looking non-GAAP financial
measures to the most directly comparable GAAP reported financial measures on a forward-looking basis because it is unable to predict certain items contained in the
GAAP measures without unreasonable efforts. Certain items that impact net income (loss) cannot be predicted with reasonable certainty, such as restructuring and
restructuring related charges, special tax items, borrowing levels (which affect interest expense), gains and losses from asset sales, the ultimate outcome of pending
litigation and spin-related costs.
4 For the calculation of net fleet capital expenditures for the nine months ended September 30, 2016, see the Appendix beginning on slide 23.
On the Path Forward
9NYSE: HRI
• Herc Holdings
began trading
on the NYSE
on July 1, 2016
Herc
Holdings
Spin
Expand and
Diversify
Revenues
Improve
Operating
Efficiencies
Enhance
Customer
Experience
On the Path Forward
• Broaden
customer base
• Expand
products and
services
• Increase
density
• Grow ancillary
revenues
• Improve vendor
management
and fleet
availability
• Drive operating
performance
through mix
and volume
• Focus on safety
and labor
productivity
• Provide
premium
products and
services
• Introduce
innovative
technology
solutions
Expand and Diversify Revenues
Expanded sales force and optimized
sales territories
Shifted focus to core premium brands and
ProSolutions™ and Pro Contractor™
equipment
Increased local rental revenue to 54% of
total as we focused on improving branch
density in urban markets
Increased ancillary revenue 18% YoY
10NYSE: HRI
Local
54%
National
Accounts
46%
Q3 ’16 1
• Broaden
customer base
• Expand
products and
services
• Increase
density
• Grow ancillary
revenues
Q3 Key Accomplishments
1 North America.
Improve Operating Efficiencies
Reduced FUR to 13.0% in September 2016 compared to
13.8% in the prior year
Implemented CRM system (Salesforce.com) to expand and
share best practices and enhance salesforce effectiveness
Progressed implementation of operating model throughout the
entire organization
Continued to improve safety performance and enhance safety
culture
11NYSE: HRI
• Improve vendor
management
and fleet
availability
• Drive operating
performance
through mix and
volume
• Focus on safety
and labor
productivity
14.7%
12.8% 12.4% 12.2% 12.7%
13.0% 13.7% 12.8% 13.0%
15.0% 14.4%
14.9%
15.7% 15.6% 15.1%
13.8% 13.9% 13.8% 13.7%
15.1%
15.9%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2015 & 2016 FUR – North America
2016 2015
Q3 Key Accomplishments
Enhance Customer Experience
Grew ProSolutions services such as
Climate Control and Restoration and
Remediation
Renovated branches to showcase
ProContractor Tools
Enhanced ProControl™ telematics for
year end rollout
Continued upgrades in mobile app and
new website, which were introduced on
July 1, enhancing customer efficiency and
effectiveness
12NYSE: HRI
• Provide
premium
products and
services
• Introduce
innovative
technology
solutions
Q3 Key Accomplishments
Industry Outlook Highlights
Positive market growth and further penetration of rental solutions expected to continue
1 The American Institute of Architects (AIA).
2 IHS Global Insight as of October 2016, excludes Party & Event data.
3 Dodge Analytics.
4 Industrial information resources.
$36$38$38
$31$32
$35
$38
$41
$44
$47$49
$51$53
$55$58
06 07 08 09 10 11 12 13 14 15 16E17E 18E 19E 20E
($ in billions)
N.A. Equipment Rental Market 2
13NYSE: HRI
as of October 2016
Non-Residential Starts 3
Architecture Billings Index 1
Industrial Spending 4
$302.6 $304.6
2015 2016E
J
a
n
-9
6
J
a
n
-0
0
J
a
n
-0
4
J
a
n-
0
8
J
a
n
-1
2
J
a
n
-1
6
50
$217 $224
$242
$265
2015 2016E 2017E 2018E
($ in millions)
Sep
48.4
as of October 2016
as of October 2016
as of October 2016
($ in millions)
• Key industry metrics,
although moderating,
continue to be positive –
non-res construction
projects being extended
• ARA forecasts North
American equipment
rental growth of 4.2%
through 2020
• Our focus on “square
footage under roof” in
major urban markets will
diversify customers and
reduce exposure to
market volatility
• Continuing migration from
ownership to rental will
fuel growth
Financial Overview
14
Q3 and YTD 2016 GAAP Summary
15NYSE: HRI
$ in millions, except EPS
Three months ended
September 30,
Nine months ended
September 30,
2016 2015 2016 2015
Equipment rental revenues $ 360.3 $ 373.2 $ 996.0 $ 1,052.5
Total revenue 403.6 431.8 1,149.6 1,255.8
Net income (loss) 3.0 20.8 (6.5) 33.1
Diluted earnings (loss) per
share
0.11 0.69 (0.23) 1.09
Adjusted EBITDA1 $ 152.1 $ 160.1 $ 390.5 $ 436.8
1 For a reconciliation to the most comparable GAAP financial measure, see the Appendix beginning on slide 23.
Q3 and YTD 2016 Equipment Rental Revenues
16
Q3 Equipment Rental Revenue
$ in millions
YTD Equipment Rental Revenue
Equipment rental revenue
increased +7.2% in key
markets, excluding
divestitures and currency
ProSolutions and
ProContractor are gaining
traction
Pricing increased 1.8%
YoY in key markets and
0.5% overall
Equipment rental revenue
increased +8.9% in key
markets, excluding
divestitures and currency
Key markets represented
83% of rental revenue
Rate of oil and gas declines
diminishing as comparable
periods are lapped
Q3 Equipment Rental Revenue Bridge
YTD Equipment Rental Revenue Bridge
NYSE: HRI
Q3 Summary
YTD Summary
$360.3
$373.2
220
240
260
280
300
320
340
360
380
2015 2016
$ 360.3
$17.9
$15.6
$20.6$373.2
220
240
260
280
300
320
340
360
380
2015 France &
Spain and
currency
translation
Key markets Oil and gas 2016
$996.0
$59.3 $64.9
$67.7$1,052.5
600
650
700
750
800
850
900
950
1,000
1,050
1,100
2015 France &
Spain and
currency
translation
Key markets Oil and gas 2016
$996.0
$1,052.5
600
700
800
900
1,000
1,100
2015 2016
17NYSE: HRI
Used equipment sales
declined YoY due to lower
amount of fleet ready for
disposal
New equipment sales were
also lower due to focus on
higher margin rental
activities rather than sales
Q3 Total Revenues Q3 Total Revenue Bridge
YTD Total Revenues YTD Total Revenue Bridge
$ in millions
Q3 and YTD Summary
$403.6 $19.7 $4.6
$8.9
$5.0
$431.8
300
320
340
360
380
400
420
440
2015 France &
Spain and
currency
translation
Equipment
rental
revenue
Sales of
revenue
earning
equipment
Sales of
new
equipment
and other
2016
Q3 and YTD 2016 Total Revenues
$403.6
$431.8
300
320
340
360
380
400
420
440
460
2015 2016
$1,149.6
$67.5 $26.2
$15.3
$2.8
$1,255.8
800
850
900
950
1,000
1,050
1,100
1,150
1,200
1,250
1,300
2015 France &
Spain and
currency
translation
Equipment
rental
revenue
Sales of
revenue
earning
equipment
Sales of
new
equipment
and other
2016
$1,149.6
$1,255.8
800
900
1,000
1,100
1,200
1,300
2015 2016
18NYSE: HRI
Q3 Adjusted EBITDA
YTD Adjusted EBITDA
$ in millions
Q3 Adjusted EBITDA Bridge
YTD Adjusted EBITDA Bridge
$152.1
$5.3
$3.5 $5.4
$6.2
$160.1
120
125
130
135
140
145
150
155
160
165
2015 France &
Spain and
currency
translation
Loss on
sales of
revenue
earning
equipment
Key
markets
Oil and gas 2016
$152.1
$160.1
120
125
130
135
140
145
150
155
160
165
2015 2016
$390.5
$16.1
$27.3 $24.7
$21.8
$436.8
280
300
320
340
360
380
400
420
440
2015 France &
Spain and
currency
translation
Loss on
sales of
revenue
earning
equipment
Key
markets
Oil and gas 2016
$390.5
$436.8
280
300
320
340
360
380
400
420
440
2015 2016
Gains in key markets more
than offset declines from
upstream oil and gas
markets
Q3 Summary
Q3 and YTD 2016 Adjusted EBITDA1
1 For a reconciliation to the most comparable GAAP financial measure, see the
Appendix beginning on slide 23.
Losses on equipment sales
primarily occurred in first
half
YTD Summary
19NYSE: HRI
Q3 Net Income
YTD Net Income
$ in millions
Q3 Net Income Bridge
YTD Net Income Bridge
Increase in spin-off
costs: IT and
professional expenses
related to the spin
transaction
First full quarter of
interest expense on
Company’s debt on a
stand-alone basis
Q3 and YTD Summary
Q3 and YTD 2016 Net Income
$3.0
$3.5
$6.8
$24.5
$2.1
$11.0
$3.9
$20.8
(1)
4
9
14
19
24
29
34
39
2015 France &
Spain and
currency
translation
Tax
expense
Other Loss on
sales of
REE
Spin-off
costs
Interest
expense
2016
$(6.5)
$27.3
$18.0
$28.8
$8.3
$19.7
$6.5
$33.1
(15)
(5)
5
15
25
35
45
55
65
2015 France &
Spain and
currency
translation
Tax
expense
Other Loss on
sales of
REE
Spin-off
costs
Interest
expense
2016
$(6.5)
$33.1
(15)
(5)
5
15
25
35
45
55
65
75
2015 2016
$3.0
$20.8
(1)
4
9
14
19
24
29
34
39
2015 2016 1
1
1
1
1 Interest expense and losses attributable to France & Spain are included in the
category labeled “France & Spain and currency translation.”
1
1
Capital Expenditures - Fleet
20
Average fleet original equipment cost (OEC).
NYSE: HRI
Continued to add core premium brands, ProSolutions™ and ProContractor™ equipment to
improve our fleet and customer mix and $ Utilization
Rental equipment at original equipment cost (OEC) 2 was $3.62 billion as of September 30,
2016
$ Utilization improved 190 basis points from the second quarter to 35.4% in the third quarter
• Average rental equipment at OEC2 for the three months ended September 30, 2016 grew 4.4%
versus the same period prior year, excluding divestitures
2016 2015 $ Variance
Total revenue earning equipment expenditures $ 444.8 $ 539.0 $ (94.2)
Revenue earning equipment disposals $ (84.4) $ (117.1) $ 32.7
Net Fleet Capital Expenditures1 $ 360.4 $ 421.9 $ (61.5)
Nine months ended September 30,$ in millions
1. For a complete calculation of net fleet capital expenditures, see the Appendix beginning on slide 23.
2. ARA methodology.
Debt and Liquidity
21
Debt Ample Liquidity
$ in millions, as of 9/30/16
$852.0
$610.0 $625.0
'16 '17 '18 '19 '20 '21 '22 '23 '24
Total Liquidity $ 927.0
Cash and Cash Equivalents 51.9
ABL Availability 875.1
Facility 1,750.0
Outstanding (852.0)
Letters of Credit (22.9)
ABL Credit
Facility
Senior Secured
Second Priority Notes
Capital
Leases
$74.4
Stable debt with long dated maturities provide financial flexibility
Total gross debt of $2.16 billion as of September 30, 2016, relatively flat with June 30, 2016
Maintained ample liquidity during the quarter - $927.0 million as of September 30, 2016
NYSE: HRI
In Summary
• Gained traction in new products
• Accelerated branch performance in urban markets
• Improved operating efficiencies
• Improved sales force effectiveness through training
and productivity tools
• Achieved growth in ancillary revenues
• Safety is our #1 priority throughout the organization
22NYSE: HRI
Appendix
23
Glossary of Terms Commonly Used in the Industry
24NYSE: HRI
OEC: Original Equipment Cost; the cost of the asset at the time it was first purchased including additional capitalized
refurbishment costs (with the basis of refurbished assets reset at the refurbishment date).
1
Fleet Age: The OEC weighted age of the entire fleet.
2
Net Fleet Capital Expenditures: Capital expenditures of revenue earning equipment minus the proceeds from
disposal of revenue earning equipment.
3
Dollar Utilization ($ Ute): Dollar utilization means revenue derived from the rental of equipment divided by the OEC
of the equipment.
4
Pricing: Change in pure pricing achieved in one period versus another period. This is applied both to year-over-year
and sequential comparisons. Rental rates are calculated based on the category class rate variance achieved either
year-over-year or sequentially for any fleet that qualifies for the fleet base and weighted by the prior year revenue mix.
5
FUR: Fleet unavailable for rent.
6
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
25NYSE: HRI
EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be
considered in isolation or as a substitute for our reported results prepared in accordance with
GAAP. Further, since all companies do not use identical calculations, our definition and
presentation of these measures may not be comparable to similarly titled measures reported by
other companies.
EBITDA and Adjusted EBITDA - EBITDA represents the sum of net income (loss), provision for
income taxes, interest expense, net, depreciation of revenue earning equipment and non-rental
depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of merger and
acquisition related costs, restructuring and restructuring related charges, spin-off costs, non-cash
stock based compensation charges, loss on extinguishment of debt, and impairment charges.
Management uses EBITDA and Adjusted EBITDA to evaluate operating performance and period-
over-period performance of our core business without regard to potential distortions, and believes
that investors will likewise find these non-GAAP measures useful in evaluating the Company’s
performance. These measures are frequently used by security analysts, institutional investors and
other interested parties in the evaluation of companies in our industry. However, EBITDA and
Adjusted EBITDA do not purport to be alternatives to net earnings as an indicator of operating
performance. Additionally, neither measure purports to be an alternative to cash flows from
operating activities as a measure of liquidity, as they do not consider certain cash requirements
such as interest payments and tax payments.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
26
$ in millions Three months ended
September 30,
Nine months ended
September 30,
2016 2015 2016 2015
Net income (loss) $ 3.0 $ 20.8 $ (6.5) $ 33.1
Provision for income taxes 3.7 14.7 9.0 28.7
Interest expense, net 32.3 9.3 52.1 27.8
Depreciation of revenue earning equipment 89.1 87.9 255.1 257.6
Non-rental depreciation and amortization 11.8 20.2 32.9 58.1
EBITDA 139.9 152.9 342.6 405.3
Restructuring charges 0.1 2.5 3.5 3.5
Restructuring related charges 1 0.2 (0.1) 2.9 6.6
Spin-off costs 10.8 4.0 37.7 19.7
Non-cash stock-based compensation charges 1.1 1.4 3.8 2.3
Other ¯ (0.6) ¯ (0.6)
Adjusted EBITDA $ 152.1 $ 160.1 $ 390.5 $ 436.8
Total Revenue $ 403.6 $ 431.8 $ 1,149.6 $ 1,255,8
Adjusted EBITDA 152.1 160.1 390.5 436.8
Adjusted EBITDA Margin 37.7% 37.1% 34.0% 34.8%
NYSE: HRI
1 Represents incremental costs incurred directly supporting restructuring initiatives.
27
Nine months ended
September 30, 2016
Actual
Sale of France and
Spain
Foreign Currency
Translation
Nine months ended
September 30, 2016
Adjusted
Total revenues $ 1,149.6 $ 0 $ 7.6 $ 1,157.2
Equipment rental revenue 996.0 0 6.2 1,002.2
Reconciliation to Adjust for Divestitures and Foreign Currency
Translation
NYSE: HRI
Nine months ended
September 30, 2015
Actual
Sale of France and
Spain
Foreign Currency
Translation
Nine months ended
September 30, 2015
Adjusted
Total revenues $ 1,255.8 $ (59.9) $ 0 $ 1,195.9
Equipment rental revenue 1,052.5 (53.1) 0 999.4
$ in millions
Three months ended
September 30, 2016
Actual
Sale of France and
Spain
Foreign Currency
Translation
Three months ended
September 30, 2016
Adjusted
Total revenues $ 403.6 $ 0 $ 0.3 $ 403.9
Equipment rental revenue 360.3 0 0.3 360.6
Three months ended
September 30, 2015
Actual
Sale of France and
Spain
Foreign Currency
Translation
Three months ended
September 30, 2015
Adjusted
Total revenues $ 431.8 $ (19.4) $ 0 $ 412.4
Equipment rental revenue 373.2 (17.6) 0 355.6
$ in millions
$ in millions
$ in millions
$ in millions
Net Revenue Earning Equipment Expenditures
28
$ in millions Nine months ended
September 30,
2016 2015
Expenditures:
Revenue earning equipment expenditures (cash flow basis) $ 325.7 $ 537.8
Purchases of revenue earning equipment in accounts payable-equipment 119.1 1.2
Total revenue earning equipment expenditures 444.8 539.0
Disposals:
Disposals of revenue earning equipment (cash flow basis) (99.0) (126.8)
Net reduction of accounts receivable-equipment balances during the period 14.6 9.7
Revenue earning equipment disposals (84.4) (117.1)
Net revenue earning equipment expenditures $ 360.4 $ 421.9
NYSE: HRI
Free Cash Flow Reconciliation
29
$ in millions Nine months ended
September 30,
2016
Net cash provided by operating activities $ 370.9
Revenue earning equipment expenditures (325.7)
Proceeds from disposal of revenue earning equipment 99.0
Property and equipment expenditures (29.2)
Proceeds from disposal of property and equipment 4.1
Other investing activities 11.3
Free Cash Flow $ 130.4
NYSE: HRI
30NYSE: HRI