Herc Holdings Inc.

Good day and welcome to the Hare-Colding third quarter and nine months 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. Please note this event is being recorded. I would now like to turn the conference over to Elizabeth Higashi. Please go ahead.

Thank you, Sarah. Good morning. Thank you all for joining us. And welcome again to our third quarter nine months 2020 earnings conference call. Earlier today, our press release, presentation slides, and 10Q were filed with the SEC and are all posted on the events page of our IR website at ir.hercrentals.com. This morning, I'm joined by Larry Silber, President and Chief Executive Officer, Aaron Birnbaum, Senior Vice President and Chief Operating Officer, and Mark Urian, Senior Vice President and Chief We'll review the third 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 risk 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 two of the presentation for a complete safe harbor statement, as well as the risk factor section of our annual report on Form 10-K for the year ended December 31, 2019, and our quarterly reports on Form 10-Q. 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 if we can start with slide number three. 2020 will certainly go down in the record books as the year that Herk Reynolds rose to the challenges of COVID-19 and numerous natural disasters. Faced with the impact of COVID-19 on economic conditions in our markets, our team has continued to deliver outstanding cost savings and efficiencies, despite the challenges of extra safety precautions relating to social distancing and wearing protective personal equipment while serving the needs of our customers. Our inherent strengths and our quick reactions contributed to better than anticipated results in the third quarter, and we are cautiously optimistic about the balance of the year. As an essential service, our locations remained open for business, and we have continued to provide our customers with rental equipment as and where needed, with the exception of our dedicated entertainment business locations. In the top tier, we are the third largest rental company serving North America, with ample scale and capital resources to provide a broad range of equipment that supports a wide variety of customers and industries. We have made strategic investments and resources to build our specialty equipment rental business over the last four years. These investments were well placed and have expanded our ability to proactively assist customers in response to the pandemic and weather-related events this year. Our strategic customer and fleet diversification has also helped to offset the COVID slowdown we experienced in certain parts of the business. Our national account customers are also weighted towards essential services, and many remained active during the shutdowns. Our national accounts represented 44% of our rental revenues. These customers are a strategic advantage for HERC with an average relationship now of over 27 years. We remain committed to providing excellent customer service and providing stability and consistency to this significant portion of our revenue base. Our customer-centric culture and high priority for safety also provides a strong foundation as we serve our customers and keep our team and community safe. As we adjust to this new and challenging environment, the strength of our organization and our business have been more evident than ever. We produced our highest EBITDA margins since the spinoff, As we continue to close the gap with our peers, our specialty pro solutions business delivered double-digit year-over-year rental revenue growth in a quarter. We continue to manage rates successfully with positive average rates for the first nine months compared to last year. And we prudently manage our balance sheet and are well-positioned with ample liquidity and modest leverage to sustain our operations in even the most difficult environments. Now please turn to slide number four. Our weekly fleet on rent and equipment rental revenue increased sequentially from the trough in mid-April through the end of September. Our focus on many of the cost savings initiatives that were introduced last year continue to contribute to our bottom line in the third quarter, and we continue to improve our transportation revenue recovery and controlled variable costs. We also generated approximately $252 million in free cash flow year to date and increased our liquidity to $1.4 billion by the end of the third quarter. With better than anticipated Q3 results, we've raised our fiscal year 2020 estimates for the full year, which Mark Erion will discuss in a few minutes. Now, please turn to slide number five for a brief overview of our third quarter financial results. We continue to experience the normal seasonal cadence coming off a low base due to the COVID-19 shutdowns in the second quarter. Equipment rental revenue was $402.3 million in the third quarter, and while we reported a decline of 12.5%, or $57.3 million compared to the prior year, our volume improved sequentially throughout the period. Total revenues in the third quarter were $456.7 million, 10.1% or $51.4 million lower than the prior year, primarily due to lower rental revenue. Adjusted EBITDA was $196.7 million in improvements from the second quarter, but a decline of 6.1% compared to the prior year. We very successfully managed costs, and despite the decline in revenue, we delivered an adjusted EBITDA margin of 43.1% in the third quarter, an improvement of 190 basis points over the prior year's 41.2% margin as we continue to close the gap with our larger peers. We also reported a substantial increase in net income to $39.9 million or $1.35 per diluted share in the third quarter of 2020 compared to $9.4 million or 32 cents per diluted share in 2019. Now I'm going to turn it over to Aaron and ask him to pick up from here to discuss in more detail our third quarter performance and the current environment. Aaron Birnbaum.