Herc Holdings Inc.

I will now turn the call over to Leslie Hunsaker. You may begin your conference.

Thank you, operator, and good morning, everyone. Welcome to HERC Rental's fourth quarter 2023 earnings conference call and webcast. Earlier today, our press release and presentation slides were furnished, and our 10-K was filed with the SEC. All are posted on the events page of our IR website. Today we're reviewing our fourth quarter and full year 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 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, 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 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. Finally, please mark your calendars to join our management meetings at three conferences this quarter. J.P. Morgan's High Yield Conference on February 27th in Miami, Evercore's Industrial Conference in New York on March 5th, and Bank of America's Industrial Conference in London on March 20th. 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. 2023 was another year of double-digit growth for Herc Reynolds. We delivered record level financial performance across the board. Equipment rental revenue grew 12% on top of 34% growth in 2022. Strong pricing of nearly 7% supported the record top line performance and more than offset inflationary pressure. Demand remains resilient and our diverse end market mix sets us up to take advantage of the most robust sector opportunities like data centers, energy, semiconductors, transportation, healthcare, and education, to name just a few. The diversification was important in 2023 as the shutdown of the studio entertainment business that resulted from the prolonged writers and actors strikes had an adverse impact on rental revenues. In fact, excluding our silly studio entertainment business, rental revenue would have been up 16% year over year. By capturing an outsized share of market volume and focusing on rate growth and operating efficiencies, adjusted EBITDA hit a record high, increasing 18% over the prior year, or 24% when you exclude Sinalese. Reported adjusted EBITDA margin in 2023 was impacted by substantially more lower margin used fleet sales. Fleet disposals at OEC increased more than 150% in 2023 compared with 2022. As the supply chain recovered in the first half of 2023 and back-ordered new fleet became available, we finally were able to begin rotating out of our oldest equipment. If we exclude Sinalese, adjusted EBITDA margin would have been 10 basis points higher year over year. Similarly, Sinalese represented a drag on ROIC of about 130 basis points, in 2023. In October, you'll recall we announced plans to explore strategic alternatives for Sinalese. There's not a lot to share until the transaction is complete, but the process is underway and moving along the normal course. Now, on slide number five, you can see that the successful execution of our growth strategies contributed to our outsized performance relative to the overall industry last year. As we continue to scale our business for sustainable growth, we invested in expanding our branch network by completing 12 strategic acquisitions with 21 locations and additionally opening up 21 greenfield locations in key markets in 2023. We also invested in our high-margin pro-solutions fleet to address growing demand, capture and cross-selling synergies, and support new specialty locations. And our innovative, customer-facing digital capabilities were the catalyst to several new project wins last year, especially at the national account level. In the fourth quarter, we conducted our annual culture and engagement survey. The results reflected an improvement in our employee net promoter score that moves us further into the top-tier benchmark range. This is a metric I look at very closely with our managers. We recognize that our employees are the foundation of our company. They drive our success, and high employee satisfaction correlates closely with high customer satisfaction. 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. Now, let me talk a little about 2024 on slide number six and how we're thinking about growth. Today, we're operating from a much stronger position 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 coverage across North America, our size, resources, and operational excellence are giving us a significant advantage in the marketplace. Tactically, for 2024, we'll continue to capture mega project opportunities, focusing on those that, A, benefit from our existing customer relationships, B, are opportunistic geographically or with potential new customers, and finally, are manageable within our bandwidth so that we can continue to deliver superior service. We'll also continue to focus on scale and market share growth, expanding our acquisition targets to the top 100 MSAs and opening roughly 30 more greenfields. As our strategies accelerate growth, it's imperative that we remain nimble, innovative, and responsive for our customers. Our new operating system, called E3OS, is designed to ensure we're consistently delivering value throughout all areas of the company in a way that differentiates our service in the marketplace. A company-wide rollout plan for E3 OS is in place, and putting the tools into practice is an important goal for 2024. We'll also continue to shift our channel mix of used equipment sales into the higher return retail market this year. Aaron will talk a little bit more about our progress on that front. Finally, fleet efficiency is a high priority for 2024 for our field operations team members who understand the role of continuous improvement in a best-in-class culture. With the disruptions from the film and TV labor strikes and the out-of-season supply chain deliveries behind us, we see a clear path to delivering margin expansion and ROIC improvement in 2024. The foundation we have built is solid, and we're excited for the opportunities in the year ahead. With that, I'll turn it over to Aaron to take you through the fourth quarter operating details and provide some of the high-level operational drivers for this year. And then Mark will walk you through the fourth quarter financial metrics and share our targets for 2024.