Herc Holdings Inc.

Good day and welcome to the Herk Holdings, Inc. Fourth 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 touch-tone 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. Please go ahead.

Thank you, Grant. And thank you all for joining us this morning. Welcome to our fourth quarter and full year 2020 earnings conference call. Earlier today, our press release, presentation slides, and 10-K were filed with the FDC and are all posted on our IR website at ir.herkrentals.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 Erion, Senior Vice President and Chief Financial Officer. We'll review the fourth quarter and full year, 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 three 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, 2020. In addition to the financial results presented on a gap basis, We will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliations for those non-GAAP measures to the closest GAAP equivalent can be found in the conference call material. 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 good morning, everyone. First of all, I'd like to thank everyone on the Herc Reynolds team for their tremendous efforts in 2020, a most challenging year on both the personal and work-related levels. Hopefully, getting the pandemic under control is in sight, with COVID-19 vaccines becoming more readily available around the country, and which we hope will make 2021 a bit brighter for our communities, our customers, and our Herc Rentals team. Please turn to slide number four. Herc Rentals continues as one of the leading rental companies in North America with ample scale and capital resources to provide a broad range of equipment that supports a wide variety of customers and industries. With a history of over 56 years in the equipment rental industry, our 4,800 employees are focused on serving our customers safely, efficiently, and effectively. Our specialty equipment rental business continued to expand in 2020 as we proactively assisted customers in response to the pandemic and weather-related events this year. ProSolutions revenue increased by 22% in Q4, when industry rental revenues declines were the norm. Our strategic customer and fleet diversification helped to offset the COVID slowdown we experienced in certain parts of the business, with the stability of our national accounts business helping to offset the declines in local customer revenue. 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 operating environment, The strengths of our organization and our business are more evident than ever. We currently operate 277 locations across the United States and Canada in 39 states and five Canadian provinces. We were excited to recently announce our first multi-location acquisition since we became a public company in 2016. Four locations in Houston. We are excited to add the Champion Rentals team to the Herc family. Now please turn to slide number five. Our full year 2020 results ended up exceeding our COVID revised expectations as we maintained positive pricing despite a decline in volume related to the COVID-19 business slowdown. We overcame the challenge of the prospect for lower demand by responding quickly while continuing to deliver outstanding cost savings and efficiencies despite the extra diligence and cost of implementing new safety precautions relating to disinfecting equipment, social distancing, and wearing protective personnel equipment. Since SPIN, we have been focused on organic growth and self-help initiatives, and we've demonstrated a solid track record in achieving these positive results. As our industry and the economy continue to climb the steps out of COVID-19 economic impacts, We look forward to moving into a growing economy where we will be well positioned to accelerate our growth. We've made significant improvements in our operating efficiency over the last two years and now intend to focus on accelerating top line growth through both the addition of new locations in major metropolitan markets and by driving utilization of more fleet through our network of branches. And we've prudently managed our balance sheet by reducing net capital expenditures early last year. We generated approximately $425 million in free cash flow and increased our liquidity to $1.4 billion by the end of the fourth quarter. Our carefully disciplined capital approach, ample liquidity, and modest leverage position us to accelerate our growth in 2021 as the business environment returns to a normal cadence. Now please turn to slide number six for a brief overview of our full-year financial results. While we continue to experience the normal seasonal cadence in the fourth quarter, we also continue to show positive momentum from the double-digit percentage rental revenue declines we experienced in the second and third quarter. As Mark Arion likes to say, we took the elevator down in Q2, and our revenues have been taking the steps back up since then. Equipment rental revenue was $1.54 billion for the full year, a decline of 9.3% or $158.1 million compared to the prior year. Volume trends continued to show positive momentum in the fourth quarter over the third quarter. Adjusted EBITDA ended the year higher than our expectations and outside the higher band for our previously stated guidance at $689.4 million. We very successfully managed costs and despite the decline in revenue, We delivered an adjusted EBITDA margin of 38.7% for the full year, our best annual adjusted EBITDA margin since the spinoff, and we continue to close the gap with our industry peers. Our focus on many of the cost savings initiatives that were introduced in 2019 also continue to contribute to our bottom line throughout 2020 as we continue to successfully reduce direct operating costs, selling, general and administrative costs, and interest expense. As a result, we reported net income of $73.7 million, or $2.51 per diluted share for the full year 2020. Now I'm going to ask Aaron Birnbaum, our Chief Operating Officer, to pick up from here to discuss in more detail our fourth quarter operating performance and current environment. Aaron?