Herc Holdings Inc.

Thank you for standing by. My name is Karen, and I will be your conference operator today. At this time, I would like to welcome everyone to the HERC Holdings fourth quarter and full year 2024 earnings call and webcast. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask a question, You may press star followed by the number one on your telephone keypad. To withdraw your question, you may press star followed by the number one again. I will now turn the call over to Leslie Hunziker. The floor is yours.

Thank you, operator, and good morning, everyone. Welcome to HERC Rental's fourth quarter and full year 2024 earnings conference call and webinar. 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 2024 results, the comments on operations and our financials, including our view of the industry and 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 factors section of our annual report on Form 10-K for the year ended December 31st, 2024. 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 the Barclays Industrial Conference or JPMorgan's High Yield Conference, both in Miami in February. We'll also be attending the J.T. Morgan Industrial Conference in New York in March. We hope to see you at one of those events. 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. It goes without saying that the performance of our business is a direct reflection of the efforts of the members of Team HERC. who come to work each and every day striving to improve our customers' experience. In 2024, her employees' hard work translated into record-level results across both key financial metrics and our growth strategies, and I couldn't be prouder of the team. Let me first give you an update on our growth strategy, starting on slide number four. 2024 was a year of agile growth. effective collaboration, and delivery of exceptional value to our customers and our shareholders. Over the past year, strong execution against our strategies further bolstered our scale, resiliency, and long-term opportunities. We opened 23 Greenfield branches in 2024, and through nine acquisitions, we added 28 more locations. Together, these will drive market share and revenue efficiencies in key metropolitan areas in line with our urban market growth strategy. In addition to desirable locations, the acquisitions bring complementary fleet categories, valuable new team members with a strong cultural fit, and new local account density while reinforcing our national account capabilities. When it comes to fleet mix in 2024, we increased our specialty fleet CapEx to be able to cross-sell our expert solutions to acquire GenRent customers, in order to capture share of wallet opportunities and to support the incremental demand for megaprojects. We also increased investments in systems and technology, delivering more value to our customers, and in concert with our continuous improvement E3 OS initiative, achieved operating productivity improvements, logistics and fleet efficiencies, and of course, pricing optimization. These contributions to our long-term strategies paid off in the short term last year when interest rate-sensitive end markets began slowing early in the second quarter. The strategic investments, process improvements, and enterprise-wide cost management enabled us to successfully navigate this dynamic operating cycle, just as they are intended to do. Now, moving to slide five. This is our 2024 financial scorecard, which includes the Sinalese business. Last year's performance really emphasized the advantages of HERC's megaproject participation, our customer project and geographic diversity, our specialty equipment and services, strategic acquisitions, and of course, our cost discipline. For the full year, equipment rental revenue was up just over 11%, outpacing fleet growth for greater asset efficiency year over year. Net income for the full year of $7.40 per diluted share included an adjustment to the fair market value of our Sinalese business, which is currently an asset held for sale. The change in the value of this asset results from the slower than anticipated recovery of the studio entertainment industry after two years of crippling labor strikes. Our analysis of the current market valuation was based on recent offers we received through the ongoing process. On an adjusted EPS basis was $12.88 per share, up about 5% over last year. Adjusted EBITDA margin increased over 2023 on a strong national account and specialty sales growth and an improving revenue comp percentile lease and higher proceeds year over year from our favorable shift in used equipment sales channels. These drivers offset the impact from the softer local markets and the typical drag from new acquisitions in greenfields. Ultimately, as these new locations mature, they drive scale efficiencies, making them a key component of our long-term profitability plan. ROIC is also being impacted by near-term inefficiencies from the new locations, which will improve over time. Mark will walk you through the year-over-year comparison in detail in just a few minutes. Looking ahead to 2025, let's jump to slide number six to share some thoughts. First, I'm proud to tell you that Team Herx celebrates its 60th anniversary this year. Our journey has been defined by innovation, collaboration, and a commitment to excellence as we've evolved to meet the ever-changing demands of the industry. We're proud of the impact we've made for our customers and are excited about the opportunities that lie ahead for continuing this legacy of service and success in the years to come. As you know, over the last eight years, we've put a lot of work into positioning our company for resiliency, which is important in a dynamic market. The diversified nature of our business today reduces our dependency on a single vertical or product type and allows the upside opportunities from any demand shifts to end markets or geographies. For 2025, we're seeing continued strength in signals for mega projects in LNG, data centers, semiconductors, along with strength in healthcare, education, and infrastructure. New projects together with increasing demand for specialty solutions, the special contribution from industrial and commercial maintenance projects, the full year revenue benefits of our recent acquisitions, and the ramp up of mega project starts from the back half of 2024. should more than offset the persistent weakness in interest rate sensitive local markets and allow us to outpace overall industry rental revenue growth again this year. When it comes to network expansion, this year we want to elevate our support of recent acquisitions in greenfields as they work toward their full margin potential in a challenging local environment. At the same time, we'll continue our strategy to build density in the top 100 geographic markets through greenfields and strategic acquisitions. Our balance sheet is strong and our leverage ratio is well within our target range. So as opportunities present themselves that fit our criteria, we'll selectively move forward to expand our presence in the top 100 North American markets. For margin and fleet CapEx, as always, we'll manage our costs and assets carefully while continuing to support the growth of our business. Now, Aaron will talk a little bit more about our operating trends, and then Mark will take you through the fourth quarter business performance and more specific puts and takes that support our full year guidance range. Aaron?