Herc Holdings Inc.

Good morning. My name is Rob and I'll be your conference operator today. At this time, I would like to welcome everyone to the Herc Holdings fourth quarter and full year 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Leslie Hunziger, Senior Vice President of IR Communications. You may begin your conference.

Thank you, Operator, and good morning, everyone. Welcome to HERC Rentals' fourth quarter 2022 earnings conference call and webcast. Earlier today, our press release, presentation slides, and 10-K were filed with the SEC and are all posted to the events page of our IR website at ir.hercrentals.com. Today, we're reviewing our fourth quarter and full year 2022 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. Now let's move on to our safe harbor and gap reconciliation 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 factor section of our annual report on Form 10-K for the year ended December 31, 2022. In addition to the financial results presented on a GAAP basis, we'll 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. And 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. Finally, please mark your calendars to join our meetings and presentations at three conferences this quarter. We'll be participating in the Barclays Industrial Conference in Miami on February 23rd, JPMorgan's High Yield Conference on March 6th, also in Miami, and Bank of America's Industrial Conference in London on March 22nd. With that, let me introduce you to our speakers. This morning, I'm joined by Larry Silber, President and Chief Executive Officer, Aaron Birnbaum, Senior Vice President and Chief Operating Officer, and Mark Irion, Senior Vice President and Chief Financial Officer. I'll now turn the call over to Larry.

Thank you, Leslie, and good morning, everyone. Let's start on slide number four. There's no question that 2022 was another exceptional year for HERC. We delivered record-level financial performance across the board. Equipment rental revenue growth was 34% on top of 24% growth in 2021. In support of the rising demand, we invested $1 billion in net fleet purchases while improving fleet productivity as evidenced by an annual increase in dollar utilization year over year. We also invested in expanding our branch network by completing 18 strategic acquisitions and opening 21 greenfield locations in key markets in 2022. And by focusing on rate growth and operating efficiencies, we've more than offset inflationary pressures as we delivered 160 basis points of adjusted EBITDA margin improvement and 120 basis points of higher ROIC. We're operating from a much stronger position today than at any time in our history with better systems and processes, more diverse end markets, a broader portfolio of products, a growing branch network, economies of scale, and a solid balance sheet. As one of the largest equipment rental providers with a national reach, our size, resources, and operational excellence are giving us a significant advantage in the marketplace. Moving on to slide five, from a macro standpoint, The North American equipment rental market generated 11% growth in 2022 on robust infrastructure, industrial, and other non-residential construction spending. Tailwind came from a ramp-up in domestic manufacturing after years of inadequate investment, the beginnings of allocation of federal funding for construction projects, and the ongoing shift that is now taking place in specialty categories from equipment ownership to equipment rental. Contractors understand better than ever the economic, environmental, and logistical benefits of running equipment across categories. In 2022, Herc grew three times faster than the industry and gained a full point of share by leveraging our increased scale, network, and capabilities to ensure that we continue to meet the needs of existing and new customers and deliver on our commitments. While demand has been strong, supply constraints are ongoing. we managed to secure the fleet necessary by leveraging our purchasing power, placing orders early in the buying cycle, utilizing our solid balance sheet, and capitalizing on our preferential position as a Tier 1 national equipment rental company. On slide six, you can see the successful execution of our growth strategies also contributed to our outsized performance relative to the overall industry. We increased revenue in our core categories of aerial, material handling, and earth-moving equipment last year by investing in fleet and optimizing our branch network. Revenue from our high-margin pro solutions business also grew in 2022 compared with 2021, incrementally benefiting from new products, new locations, and cross-selling synergies. And our innovative customer-facing digital capabilities were the catalyst to several new project wins late last year, especially at the national account level. You'll hear more about that from Aaron in a minute. At the same time, we're committed to responsible ESG operating practices built on a strong cultural foundation, a safety-first protocol, and a pledge to continue to work hard to do more to protect the environment, often in partnership with our customers and suppliers. Finally, between fleet investments, strategic M&A, dividend growth, and opportunistic share repurchases, I'm confident that HERC is allocating capital in the right areas and at the right time. We entered 2023 from a position of strength with a commitment to our growth plan, the strategies driving it, and the incredible people who execute it at such a high level. On slide number seven, in addition to continued strength in data centers, healthcare facilities, petrochem, and other key end markets, onshoring and fiscal stimulus trends have only accelerated, despite concerns about a potential slowdown in the market. These mega projects represent the beginning of a multi-year flow of dollars into the industrial space. Every time you hear sustainability, climate change, and resiliency, you're hearing about growth opportunities for our company. In 2021, we outlined our three-year strategic plan to grow and strengthen our core business, diversify our products and services, and operate more efficiently as we drive higher, more durable returns. Today, we're tracking ahead of that plan as industry demand surpasses forecast, and we continue to follow the HERC playbook for superior performance. With that, I'll turn it over to Aaron Birnbaum to take you through the fourth quarter details and provide some high-level operational drivers for the year. And then Mark Erion is going to walk you through the fourth quarter financial metrics and share our targets for 2023. Aaron?