Herc Holdings Inc.

Ladies and gentlemen, good morning. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Herc Holdings Incorporated first quarter 2023 earnings conference call. Today's conference is being recorded and 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 the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one once again. Thank you, and I will now turn the conference over to Leslie Hunziker, Senior Vice President of Investor Relations. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to HERC Rental's first quarter 2023 earnings conference call and webcast. Earlier today, our press release, presentation slides, and 10-Q were filed with the SEC, and all are posted to the events page of our IR website, at ir.herrentals.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 Humphrey, Senior Vice President and Chief Financial Officer. Today we're reviewing our first quarter 2023 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 3. 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 material from the forward-looking statements made on this call. You should also refer to the risk factor section in our annual report on Form 10-K for the year ended December 31, 2022 and our quarterly report on Form 10-Q for the period end March 31, 2023. 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. A replay of this call can be accessed via dial-in and through the 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. The Goldman Sachs Industrial Conference in New York City on May 9th, KeyBank's Industrial Conference on June 1st in Boston, and Wells Fargo's Industrial Conference in Chicago on June 14th. I'll now turn the call over to Larry Silver.

Thank you, Leslie, and good morning, everyone. Before I begin, I want to take a moment to introduce Mark Humphrey. Mark was promoted to Chief Financial Officer in late March with the departure of Mark Arion, who, as you may know, left to take the CEO role of privately held TNT Crane and Rigging. Mark Humphrey has been a member of our executive team since joining HERC nearly seven years ago, and we're excited to have him lead this role and drive our long-term financial strategy. He is a highly knowledgeable, proven financial leader who has already demonstrated his capabilities as our Chief Accounting Officer. Additionally, Mark brings 30 years of financial experience, including having previously served as CFO for Alico Incorporated, a NASDAQ-traded company. I look forward to all of you getting to know him. Now let's get started on slide number four. We're off to a solid start in 2023. Revenue and adjusted EBITDA were at all-time first quarter record highs, driven by continued double-digit volume growth and 7% higher rental rate growth year over year. Our flexible business model, diverse customer base, and broad equipment portfolio allowed us to capture top-line growth in Q1 across both core and specialty categories. And our capital allocation strategy focused on profitable growth investments hitting the mark as evidenced by our record first quarter return on invested capital of 10.6% and 80 basis point increase over last year. On slide number five, you can clearly see that we're significantly outperforming the equipment rental industry. ARA estimates that the industry grew 6% in the first quarter compared with our rental revenue growth of 24%. Revenue from national and mega projects as well as local infrastructure work remains robust. The largest rental companies with fleet capacity and the strongest branch networks are winning an outsized portion of the construction starts. In addition to record rental revenue, we've more than doubled fleet sales on an OEC basis in the first quarter versus prior year. generating 52% proceeds as a percent of OEC compared with 45% last year. The increase was due to our favorable sales channel mix shift as well as the ongoing strength of the used equipment market. We are in a great position for continued growth through the balance of the year. Team HERC has been advancing the key initiatives of our strategic plan while at the same time continuing to execute well remaining flexible to react to seasonal market conditions and be able to pivot quickly to capitalize on areas of growth. If you turn to slide six, in addition to leveraging our scale as a market leader, 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 through fleet investments, as well as acquisitions and new greenfield facilities that support branch network optimization. Revenue from our high-margin pro solution specialty business grew double-digit in the first quarter, incrementally benefiting from new products, new locations, and cross-selling synergies. And our innovative customer-facing digital capability called ProControl NextGen continues as a catalyst to new project wins, especially at the national account level. 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 for our employees, customers, and suppliers. In the first quarter, we were recognized among great places to work in Canada. 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. With that, I'll turn it over to Aaron to take you through the high-level operational drivers in the first quarter, and then Mark is going to walk you through the first quarter financial metrics. Aaron?