Herc Holdings Inc.

Good morning. Welcome to the HERC Holdings First Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Elizabeth Higashi, Vice President of Investors Relations. Please go ahead.

Thank you, and thank you all for joining us this morning. Welcome, everyone, to our first quarter 2020 earnings conference call. We all hope you and your families are safe and well. We're conducting today's call following the Centers for Disease Control and Prevention guidelines, using both social distancing and the use of technology for remote access. Earlier today, our press release, presentation slides, and 10Q were filed with the FDC and are all posted on the events page of our IR website at ir.kerprentals.com. This morning, I'm joined by Larry Silbert, President and Chief Executive Officer, Aaron Birnbaum, Senior Vice President and Chief Operating Officer, and Mark Erion, Senior Vice President and Chief Financial Officer. We'll review the first quarter, our view of the industry, and our strategic outlook. The prepared remarks will be followed by an open Q&A. Before I turn the call over to Larry, there are a few items I'd like to cover. First, today's conference call will include forward-looking statements. These statements are based on the environment as we see it today and therefore involve risks and uncertainties. I would caution you that our actual results could differ materially from the forward-looking statements made on this call. Please refer to slide 2 of the presentation for our complete safe harbor statement, as well as the risk factors section of our annual report on Form 10-K for the year ended December 31, 2019. In addition to the financial results presented on a GAAP basis, we will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures to the closest GAAP equivalent can be found in the conference call materials. Finally, a replay of this call can be accessed via dial-in or through a webcast on our website. Replay instructions were included in our earnings release this morning. We have not given permission for any other recording of this call and do not approve or sanction any transcribing of the call. I'll now turn the call over to Larry.

Thank you, Elizabeth, and thank you all for joining us this morning. It's been quite a start to 2020. The quarter began as expected with volume on rent and pricing relatively solid and moving in the typical seasonal patterns. Then in late March, our business was impacted by wave after wave of COVID-19 related disruptions to activity in major metropolitan markets that has significant impact on rental volumes. While the velocity of the economic downturn is unlike anything any of us has ever experienced, The senior leadership team on this call has, on average, more than 30 years of experience in the equipment rental industry. We've experienced several recessions and other unexpected events that temporarily impacted rental equipment demand, and while this pandemic surprised everyone, we're taking steps to manage through the changing environment. When business conditions recover, we intend to be optimally positioned to assist our customers in the turnarounds. The impact on our end markets has been fast, and we had to react very quickly, putting in place our recession playbook in short order. First and foremost, our reaction to the onset of the COVID-19 pandemic was to focus on the health and safety of our team, our customers, and our communities. And we quickly communicated and implemented actions to take precautions to prevent the virus from spreading. We have a resilient business model and rent equipment to a diverse group of customers and industries. many of which provide essential and critical business services. That diversity should help mitigate some of the impact of the COVID-19 pandemic on our business results. Our leadership team worked quickly to evaluate the rapidly developing trends we were seeing in the market and adjusted our business to take into consideration the potential impact of the pandemic. In evaluating the changing environment, we took steps to cut variable costs and net capital expenditures. Aaron will cover in detail the steps we have taken to adjust our business activities. We also developed various downside scenarios to assess our ability to manage in an increasingly challenging environment. Mark will discuss those assumptions later on our call. We have prudently managed our balance sheet and are well-placed with modest leverage and ample liquidity to sustain our operations in even the most difficult environments. Our disciplined capital management approach is an important element of our strategy. and we'll continue to make adjustments as necessary to efficiently operate and support our customers in this uncertain environment. Now, please turn to slide number four. We implemented CDC recommendations across all of our operations and reinforced hand washing, social distancing, and the avoidance of touching your face, as well as infection control at work and in the home in frequent communications. We restricted non-essential travel, and moved 95% of office staff to remote work in early March. We put in place policies regarding sick individuals and self-quarantining and stepped up procurement of essential cleaning materials, protective gear, and disinfectants. We implemented additional cleaning procedures for our branch operations and for returned equipment. We are now monitoring and following CDC recommendations with respect to screening employees and instituting protective measures for employees interacting directly with customers. And while we enhance our operational and safety procedures and have been operating in a challenging environment, all of our regions, I'm happy to say, have reported at least 85% perfect pays. Before I began the discussion of our results, I want to thank all of our team members for their work supporting the critical and essential work of our customers and communities in this challenging environment. I'm proud of the can-do attitude of our team as we work together to navigate this challenging time together. We remain ready to support our customers' operations in whatever capacity we can in this uncertain time, and especially when construction and business activities resume. The health and safety of our team, our customers, and our communities remain our highest priority while we continue to provide the equipment and services required by our customers. Now, please turn to slide number five. We're pleased with our performance in the first quarter, despite the COVID-19 related disruption that started in mid-March. We improved pricing once again. We achieved excellent flow through from better operational efficiencies, and we continue to generate strong operating cash flows and are well positioned with ample liquidity to fund our business needs in 2020. Now, please turn to slide number six for a brief overview of our first quarter financial results. Equipment rental revenue grew 2.4% or $8.9 million to $386.5 million. Total revenue declined to $436.2 million due to lower sales of used equipment and lower retail activity. We reported a net loss of $3.7 million or 13 cents per diluted share in the first quarter of 2020, and improvement from last year's net loss of $6.7 million or 23% per diluted share in 2019. Adjusted EBITDA increased 3.8% to $147.7 million in the first quarter, reflecting the success in our cost control initiatives. Adjusted EBITDA margin was 33.9% for the first quarter, which was a 400 basis point improvement over prior year. Now, I'm going to ask Aaron to pick up from here to discuss our first quarter operating performance in the current environment. Aaron?