Herc Holdings Inc.

third quarter 2023 earnings call. Today's conference is being recorded. 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 again. At this time, I would like to turn the conference over to Leslie Hunziker, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to HERC Rentals' third quarter 2023 earnings conference call and webcast. Earlier today, our press release and presentation slides were furnished, and our 10Q was filed with the SEC. All are posted on the events page of our IR website at ir.hercrentals.com. Today, we're reviewing our third quarter 2023 results with comments on operations and our financials including a view of the industry and our strategic outlook. The prepared remarks will be followed by an open Q&A. Now let's move to our safe harbor and gap reconciliations 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, and our quarterly report on Form 10-Q for the period end September 30, 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 gap equivalent can be found in the conference call materials. A replay of this call can be accessed via dial-in or 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. This morning I'm joined by Larry Silber, President and Chief Executive Officer, Aaron Birnbaum, Senior Vice President and Chief Operating Officer, and Mark Humphrey, Senior Vice President and Chief Financial Officer. I'll now turn the call over to Larry.

Thank you, Leslie, and good morning, everyone. Please turn to slide number four. Our third quarter results were driven by our strong business-based improved operating leverage and continued M&A initiatives. Total revenue and adjusted EBITDA were third quarter records, driven by a 6.9% increase in rental rate and above-market volume growth. Additionally, we ramped up fleet dispositions in the quarter to adjust to higher OEM shipments in the first half of the year and to take advantage of the healthy used equipment market. Used fleet sales carry a lower margin than rental revenue, but if we exclude fleet sales from the equation, rental EBITDA, or REBITDA as we call it, generated a significant margin and flow-through improvement in the quarter. Of course, as expected, and as noted on the slide, EBITDA margin in the quarter was impacted by the sale of nearly three times more fleet at OEC and continued disruptions from labor strikes in the studio entertainment industry. In the third quarter, our capital allocation strategy focused on profitable growth investments, supported an incremental increase in ROIC compared with last year. On slide number five, We're working in a favorable operating environment as the equipment rental market continues to benefit from strong demand across a variety of end markets and geographies. And we continue to outpace market growth as a result of our premium assets, national footprint, broad-based capabilities, and expert services. Our third quarter rental revenue grew another 8% on top of the 35% growth last year, excluding studio entertainment, rental revenues increased 13% over the prior year quarter. The studio shutdowns continued into the fall as the Actors Guild joined the screenwriters on strike, making the first time in 63 years that the Hollywood writers and actors were striking at the same time. While the writers finally resolved their dispute, the actors remain on strike, keeping most productions idle. Total revenue got a boost in the latest quarter as we significantly increased sales of used fleet. The supply chain's recovery in certain equipment categories allowed us to begin addressing the pent-up rotations from the last two years. We headed into the fourth quarter with our fleet better matched to demand after successfully managing through a wave of equipment deliveries in the first half of the year. If you turn to slide number 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 are increasing 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 digits again in the third quarter, incrementally benefiting from cross-selling synergies, customer wins, and expanding fleet in new products like print-sharing. And our innovative customer-facing digital capability, called ProControl NextGen, continues as a catalyst to new project wins, especially at the national account level. As always, We're committed to responsible 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 third quarter, we were a recipient of the 2023 Hire Vets Medallion Award that recognizes employers who successfully recruit, hire, and retain veterans. We're also named among the best and brightest companies to work for by the National Association for Business Resources. We're honored to be recognized for these awards as they stand as a testament to our unwavering dedication to our team members and the importance we place on having a best in class culture. Finally, between fleet investments, strategic M&A, dividends, and opportunistic share repurchases, we are strategically allocating capital to drive long-term growth and higher returns. Now, before I turn it over to Aaron, let's move on to slide number seven, where I'll give you some background on our plans to explore strategic alternatives for our studio entertainment business, which we announced in the press release. Let me start by clarifying that our studio management and lighting and grip offering is branded in the TV and film industry as Sinalese. In January 2012, we acquired Sinalese to expand our product offering and our footprint in another fast-growing specialty rental market. Sinalese is one of the largest lighting and grip rental companies in the United States with a scaled studio platform. Over the past few years, the industry for renting lighting and grip equipment to studios has evolved as investment firms began purchasing sound stages and physical studios as attractive ways to diversify their real estate portfolios. These new owners want to offer a single point of contact for studios, studio management, and lighting and grip equipment, thereby making it less of a rental model and more a permanent part of their in-house business. As a result, In order for us to continue to grow the Sinalese studio management and lighting and grip business, Herc would need to add fixed cost studio real estate to our portfolio offering. And that capital requirement would be a departure from our core rental business model. So at the beginning of the year, we began discussing strategic options for Sinalese that will enable it to continue to maximize its potential either with Herc or on its own. we determined that exploring external opportunities was prudent, and so that process has begun. As you can see on this slide, our HERC Entertainment Services business will continue to rent our rolling stock equipment to both on-location studios, off-location productions for TV and film, and live entertainment venues. Mark will share with you our financial performance here to date, excluding Sinaloa's, to give you some perspective on the very strong performance of the Go Forward business base. Finally, I'll just say that Sinalese has been a great business for us. It's a high margin, seasonally steady growing platform business with a loyal team of product and service experts. And it has opened doors for Herc Entertainment Services to continue to flourish in this robust and exciting end market. We are confident that the strategic actions we are announcing today will help ensure that Sinalese and the incredibly strong and dedicated group of colleagues that comprise it are on the best possible trajectory moving forward. And that Hertz resources and focus remain on its core strategies for profitable long-term growth. With that, I'll turn it over to Aaron to share the high-level operational drivers in the third quarter. Aaron?