Herc Holdings Inc.

Good day and welcome to the HERC Holdings Second Quarter 2021 Earnings Conference Call. All participants will be in a 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 the star, then one. Please note that this event is being recorded. I would now like to turn the conference over to Elizabeth Higashi, Vice President of Investor Relations. Please go ahead.

Thank you, Cole, and thank you all for joining us this morning. And welcome, everyone, to our second quarter 2021 earnings conference call. Earlier today, our press release presentation slides and 10Q were filed with the FDC and are all posted on our IR website at ir.kirkrentals.com. This morning, I'm joined by Larry Silver, President and Chief Executive Officer, Aaron Birdbaum, Senior Vice President and Chief Operating Officer, and Mark Erion, Senior Vice President and Chief Financial Officer. We'll review the second 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 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 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 for 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. Our quarter results continue to demonstrate outstanding operational execution. our industry-leading rate management delivered strong results in a favorable operating environment, which benefited from tight equipment supply and steady rental demand. Given the current operating environment, we also decided to invest in additional fleet before the end of the year and have raised our 2021 net fleet capital expenditure guidance by $100 million to $500 to $550 million. Our year-to-date momentum is expected to drive a year of record performance. Given the indications for the rest of the year, we've raised full-year adjusted EBITDA guidance for the second time this year to $840 to $870 million. Now please turn to slide number five. We recently celebrated our fifth anniversary as a public company on July 1st. With a history of over 56 years in the equipment rental industry, Our 4,800-plus member team works hard to ensure our customers achieve optimal performance safely, efficiently, and effectively every day. Our employees spoke of our vision, values, and mission in our recently produced 50-year anniversary video, which is posted on our corporate website. Everything we do is built on our promise and commitment to help our customers and communities build a brighter future. In the fall, on September 20th, We are hosting an in-person investor meeting in New York City. We'll be sending out more details closer to the event date, but please mark your calendars to attend either in person or virtually. Now that we have successfully executed our first five years, we'll be sharing with you the next stages of our journey at that event. We integrated six branches via acquisitions and opened three Greenfield locations in our network this year. As of today, we are now operating 280 locations across the United States and Canada in 39 states and five Canadian provinces. We're excited about the momentum we are generating and in developing our M&A pipeline. Now, please turn to slide number six for a brief overview of our second quarter financial results. Given the unusual performance in 2020 due to the impact of COVID-19, we share here a comparison with not only 2020, but 2019. As you can see, our performance in 2021 clearly returned to a trajectory of growth over the last two years. Equipment rental revenue was $448 million in the second quarter, an increase of 36.8%, or $120.4 million compared to the prior year, and 9.9% over 2019. This increase was driven by solid performance in our core business, growing market share from our pro solutions business, and investments in our entertainment business, which are now outpacing our pre-pandemic performance in 2019. Adjusted EBITDA grew by 39% over the prior year and 18.8% over 2019. Our focus on operating leverage improved year-over-year adjusted EBITDA margin 170 basis points, to 42.3% in the second quarter of 2021. We reported net income of $47.1 million, or $1.55 per diluted share in the second quarter, compared with $2 million or 7 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 AHRQ, and we look forward to breaking more records as the year progresses. Now, please turn to slide number seven. We recently published our 2021 Corporate Citizens Report, which aligns to the global reporting initiative standards for the first time. Located on our investor relations website, we hope you find the additional transparency of interest. We established three major goals for 2030 using 2019 as a base year. First, reducing our greenhouse gas emissions intensity by 25%. Second, reducing our non-toxic waste to landfill by 25%. And finally, continuing to improve our safety annually with a target TRIR of 0.49 or lower. We intend to report annually on our progress and look forward to discussing our ESG program with you. Now, for more about the details of our operations in the quarter, here's Aaron Birnbaum, our Chief Operating Officer. Aaron?