Herc Holdings Inc.

Good morning everyone and welcome to the HERC Holdings first quarter 2022 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 star and then one. To withdraw yourself from the question queue, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Elizabeth Higashi, Vice President of Investor Relations and Sustainability. Ma'am, please go ahead.

Thank you, Jamie, and thank you all for joining us this morning. Earlier today, our press release presentation slides and 10-Q were filed at 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 Silver, 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 our first quarter results with comments on operations and our financials, including our view of the industry and our strategic outlook. The prepared remarks will be followed by an open Q&A. Before we begin our formal remarks, I'd like to remind you to review our safe harbor statement on slide three. Today's 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. You should also refer to the risk factors section of our annual report on Form 10-K for the year ended December 31, 2021. 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. And I'll turn the call over to Larry.

Thank you, Elizabeth, and good morning, everyone. Please turn to slide number four. I'm pleased to report that we achieved new records in the first quarter of 2022 in total revenues, rental revenue, net income, dollar utilization, adjusted EBITDA, and adjusted EBITDA margin. Volume and rates contributed to the 32% increase in rental revenue over the prior year. Dollar utilization increased 280 basis points to 41.4%. Outstanding performance by our sales, operations, and field support teams was enhanced by steady demand and a positive operating environment. In addition, we completed the acquisition of three smaller companies with three locations and opened five new greenfield locations in the quarter. We are pleased that earlier this week, We closed on the acquisition of Cloverdale Equipment Company, a full-service general equipment rental company with 120 employees serving construction and industrial customers with core operations in the metropolitan areas of Detroit and Grand Rapids, Michigan, Cleveland, Ohio, and Pittsburgh, Pennsylvania. I'd like to welcome all of the employees of our latest acquisitions to the Herc family and thank our acquisition and integration teams for their work in closing and integrating the new operations and new employees into our systems and team. I'd also like to extend our appreciation to the entire Herp team for executing and delivering a record quarter as we start the new year. Based on the strength of the first quarter performance and our outlook for the rest of the year, we've raised our 2022 guidance for adjusted EBITDA again, and Mark Erion will discuss that in detail later this morning. Please turn to slide number five, which shows the first quarter results over the last five years. Our first quarter results continued to demonstrate outstanding operational execution. Equipment rental revenue was $526.8 million in the first quarter, an increase of 32%, or $126.4 million compared to the prior year. This increase was driven by solid performance in our core business, and growing market share from our specialty businesses. Total revenue grew 25% to $567.3 million. Despite lower sales of rental equipment, a decision we made to continue to meet requirements of our customers in light of tight supply of new equipment related to supply chain issues from our original equipment manufacturers. We reported an increase of 78% in net income to $58.5 million or $1.92 per diluted share in the first quarter, compared with $32.9 million or $1.9 per diluted share last year. Adjusted EBITDA grew 28% over prior year to $236.8 million. Our enhanced scale and focus on operating leverage improved year-over-year adjusted EBITDA margin 100 basis points to 41.7% in the first quarter of 2022, another record. This is an exciting time for Team HERC, and our first quarter reflects the professionalism and tenacity of our team. Our team is committed to providing excellent customer service and expanding our rental solutions to a broad array of customers and industries to achieve even greater success. The growth goals we presented at our investor day last fall were based on the foundations for growth we built over the last several years. We do know how to grow. Please turn to slide number six. With over 56 years of history in the equipment rental industry, our 5,700 team members work hard to ensure our customers achieve optimal performance safely, efficiently, and effectively every day. Everything we do is built on our promise and commitment to help our customers and communities build a brighter future. At the end of the quarter, we operated 320 locations across the United States and Canada in 40 states and five Canadian provinces. This week, we added four more locations with the Cloverdale acquisition, and so far this quarter, we've opened an additional one Greenfield location. The addressable North American market size is now estimated to be $57 billion and growing by about 10% in 2022, according to the American Rental Association. We expect to continue our momentum by addressing the opportunities in the market and to continue to outperform the overall industry as we grow through organic growth, supplemented by select acquisitions. Now please turn to slide number seven. As you can see from this slide that we introduced at our investor day, our major strategic pillars are focused on growing our core business, expanding specialty, elevating technology, integrating ESG, and maximizing our allocation of capital. We are executing these strategic initiatives, and Aaron Birnbaum, our Chief Operating Officer, will now update you on our progress in operations. Aaron?