Herc Holdings Inc.

Good morning. Welcome to HERC Holdings First Quarter 2021 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'll be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Elizabeth Higashiy,

Please go ahead. Thank you, Kate, and good morning, everyone. Thanks for joining us. Welcome to our first quarter 2021 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.kirkrentals.com. This morning, I'm joined by Larry Silberg, President and Chief Executive Officer, Erin Birnbaum, Senior Vice President and Chief Operating Officer, And Mark Urian, 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 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 three 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-end of December 31, 2020. 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 with 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. Please turn to slide number four. We're off to a great start in 2021. What a difference 12 months makes. Just a year ago when we reported our first quarter, like other companies, we pulled our guidance due to the uncertainty of the potential impact of the COVID-19 pandemic. Now, a year later, we continue to execute and grow the business and have the confidence to increase the full year guidance we provided just a few months ago. Our outstanding team of professionals represent a company with a history of over 56 years in the equipment rental industry. The purpose that drives our 4,800 employees is to help our customers and communities to build a brighter future. They do this every day by staying focused on serving our customers safely, efficiently, and effectively. During the first quarter, we added three new greenfield locations in Pittsburgh, Pennsylvania, Santa Fe Springs, a suburb of Los Angeles, California, and Houston, Texas. In April, we acquired two independent locations in the San Francisco Bay Area, increasing our location count to 15 in that major metropolitan area. As of today, we are operating 282 locations across the United States and Canada in 39 states and five Canadian provinces. Now, please turn to slide number five. We entered the year with our fleet well positioned to meet anticipated demand and saw the normal seasonal improvement in volume on rent during the quarter. As expected, our volume did not quite return to prior year levels and rates were still down slightly, but we did generate rental revenue growth as a result of strong contributions from our specialty and entertainment businesses. With the return to positive rental revenue growth, we continue to excel in our strategic focus on operating leverage and delivered excellent bottom line improvement. With over 200% flow through, we drove more than 25% year-over-year growth in adjusted EBITDA. This significant beat not only exceeds our Q1 2020 results, which were mostly pre-pandemic, but also Q1 2019, which puts us on track for a record year. Our strong first quarter performance, along with the steady demand we are seeing in our end markets, have us confident in our ability to significantly increase our full year adjusted EBITDA guidance from a range of $730 million to $760 million to a new range of $800 million to $840 million. We are looking for a record year in 2021 that substantially beats our previous record in 2019. Now, please turn to slide number six for a brief overview of our first quarter financial results. Equipment rental revenue was $400.4 million in the first quarter, an increase of 3.6%, or $13.9 million compared to the prior year. This increase was driven by positive mix as our pro solutions business continues to take market share and our entertainment business became a strong tailwind. Adjusted EBITDA grew by 25% on prior year, which was a record first quarter for the company, and our focus on operating leverage improved adjusted EBITDA margin by 680 basis points. We reported net income of $32.9 million, or $1.9 per diluted share in the first quarter, compared with a loss of $3.7 million, or 13 cents per diluted share last year. As you can see from our results, we are indeed off to a strong start in 2021. This is an exciting time for Team HERC, and we look forward to breaking more records as the year progresses. Now, for more about the details of our operations in the quarter, here's our Chief Operating Officer, Aaron Birnbaum.