Market Overview

Herc Holdings Reports Preliminary Fourth Quarter and Full Year 2016 Results and Announces Full Year Guidance for 2017

Share:





Herc Holdings Inc. (NYSE:HRI) ("Herc Holdings" or the "Company") today
reported preliminary financial results for the fourth quarter and full
year ended December 31, 2016. Equipment rental revenues were $356.7
million and total revenues were $405.2 million in the fourth quarter of
2016, compared with $359.2 million and $422.4 million, respectively, for
the same period last year. The Company reported a net loss of $14.0
million, or $0.49 per diluted share, for the fourth quarter, compared to
net income of $78.2 million, or $2.68 per diluted share, for the same
period last year.

The fourth quarter net loss was primarily attributed to increased costs
resulting from the spin-off and stand-alone costs, including an increase
in interest expense and depreciation. Although upstream oil and gas
markets continued to be a challenge, the year-over-year decline in these
markets in the fourth quarter was less than in the third quarter. In
addition, in 2015, we recognized a gain of $50.9 million on the sale of
operations in France and Spain, which were divested in October 2015.

"This year was a critical milestone in our ongoing business
transformation process," said Larry Silber, president and chief
executive officer. "Our strategy, which includes a number of
initiatives, programs and actions, is beginning to show results on
behalf of our customers, employees and shareholders. In the fourth
quarter, we achieved growth in equipment rental revenues in our key
markets of 6.2% and improved pricing in those markets by 1.5% compared
with the prior year.

"The ongoing shift in our fleet mix is positioning our business for
long-term success. The rollout of our ProContractor Tools™ and
ProSolutions™ equipment and services expands and diversifies our fleet
and enhances our ability to provide a wide array of equipment to meet
our customers' equipment needs. In addition, new and upgraded
technologies, including our ProControl™ telematics system that rolled
out in the fourth quarter, further enhances the value we offer
customers. We remain confident in our business strategy, our people and
the growth opportunities ahead," said Silber.

Fourth Quarter Highlights

  • Equipment rental revenues in the fourth quarter of 2016 were $356.7
    million, compared to $359.2 million in the prior year quarter, a
    decline of 0.7%, which was attributable to lower revenues in upstream
    oil and gas markets, divested foreign operations and negative currency
    impacts. Revenue growth in key markets more than offset the impact of
    lower revenues in upstream oil and gas markets.

    • Excluding divested foreign operations and currency, equipment
      rental revenues in key markets increased 6.2% and accounted for
      84% of total revenues. Key markets are defined as markets we
      currently serve outside of upstream oil and gas markets.
  • Pricing in key markets increased 1.5% and overall pricing increased
    0.5% in the fourth quarter, compared to the same period in 2015.
  • Adjusted EBITDA in the fourth quarter was $145.7 million, a decline of
    $18.1 million or 11.1% versus the prior year period, primarily due to
    the impact of upstream oil and gas markets, stand-alone costs and
    additional headcount, primarily in operations and sales. See page A-4
    for a description of the items excluded in calculating adjusted EBITDA.
  • Continued improvement in branch operating efficiencies reduced average
    fleet unavailable for rent (FUR) to 15.3% in the month of December
    2016, compared with 15.9% in December 2015. December FUR reflects
    normal seasonality driven by lower rental activity in the period.
  • Dollar utilization of 34.1% in the fourth quarter was impacted by
    lower activity in upstream oil and gas markets, the ramp up of new
    locations and the addition of new fleet categories across our
    locations.
  • Interest expense in the fourth quarter was $32.1 million, an increase
    of $27.0 million compared with the prior year period, reflecting the
    increase in the Company's debt on a stand-alone basis.
  • Spin-off costs totaled $11.5 million in the fourth quarter of 2016,
    compared with $6.1 million in the comparable period in 2015. The
    increase was related primarily to higher IT and professional expenses
    incurred in connection with the June 30, 2016 separation from the
    Hertz car rental business.

Full Year 2016 Highlights

  • Equipment rental revenues for the year ended 2016 were $1,352.7
    million, a decline of 4.2% compared with $1,411.7 million in 2015,
    which was attributable to lower revenues in upstream oil and gas
    markets, divested foreign operations and negative currency impacts.
    Revenue growth in key markets more than offset lower revenues in
    upstream oil and gas markets.

    • Excluding divested foreign operations and currency, equipment
      rental revenues in key markets increased 8.1% and accounted for
      83% of total revenues.
  • Pricing in key markets improved 1.6% and overall pricing was up 0.3%
    for 2016, compared to full year 2015.
  • Net loss for the year ended 2016 was $20.5 million, or $0.72 per
    diluted share, compared to net income of $111.3 million, or $3.69 per
    diluted share, in 2015. Net loss was significantly impacted by the
    increase in interest expense related to debt as a stand-alone company,
    the loss on the sale of revenue earning equipment and spin-off costs.
    In addition, in 2015, we recognized a gain of $50.9 million on the
    sale of operations in France and Spain.
  • Adjusted EBITDA for the year ended 2016 was $536.2 million, a decline
    of $64.4 million versus the prior year. The decline was primarily due
    to lower results in upstream oil and gas markets and losses related to
    the sale of revenue earning equipment, most of which occurred in the
    first half of 2016. Results in key markets offset most of the decline
    in upstream oil and gas markets. In addition, 2015 included ten months
    of results from divested foreign operations. See page A-4 for a
    description of the items excluded in calculating adjusted EBITDA.
  • Interest expense for the year ended 2016 was $84.2 million, an
    increase of $51.3 million compared with the prior year, reflecting the
    increase in the Company's debt on a stand-alone basis.
  • Spin-off costs totaled $49.2 million for the year ended 2016, compared
    with $25.8 million in 2015. The increase was related primarily to
    higher IT and professional expenses incurred in connection with the
    June 30, 2016 separation from the Hertz car rental business.

Year-End Assessment and Reporting

The Company has filed a Form 12b-25 with the Securities and Exchange
Commission ("SEC") today providing for a 15-day extension for filing its
Annual Report on Form 10-K for the year ended December 31, 2016 (the
"Form 10-K").

On June 30, 2016, the Company separated from Hertz Rental Car Holding
Company, Inc. (the "Spin-Off"). Typically, a new public company is not
required to report on the effectiveness of its internal control over
financial reporting ("ICFR") in its first year-end report. However, due
to the structure of the Spin-Off, even though the Company is considered
the spinnee or divested entity for accounting purposes, management
nevertheless is required to assess and report for the first time on the
Company's ICFR as of December 31, 2016 based on management's risk
assessment and lower materiality levels as a stand-alone company.
Because a significant number of business process controls had to be
established, documented and tested for the first time, management was
not able to complete this assessment by March 1, 2017, the deadline for
filing the Form 10-K.

Although management has not finalized its assessment of the
effectiveness of the Company's ICFR, the Company believes management's
assessment will conclude that the Company did not maintain effective
ICFR as of December 31, 2016, because material weaknesses that existed
at the time of the Spin-Off were not fully remediated and because
management identified new material weaknesses relating to ineffective
controls over revenue recognition and the ineffective design of controls
over certain IT systems that are relevant to the preparation of the
Company's financial statements. Management may identify other material
weaknesses in the Company's ICFR as management completes its assessment
of ICFR.

While material weaknesses create a reasonable possibility that a
misstatement in financial reporting may go undetected, after review and
analysis, no restatement of or other material adjustments, or revisions
to previously issued financial statements, or to the results reported in
this press release, currently are expected to be required.

The Company expects to finalize its financial results and assessment of
ICFR and file its Form 10-K within the prescribed time allowed pursuant
to Rule 12b-25. Please refer to the Form 12b-25 filed with the SEC today
for additional information.

Capital Expenditures -- Fleet

  • The Company reported net fleet capital expenditures of $352.9 million
    for the year ended 2016. See page A-5 for the calculation of net fleet
    capital expenditures.
  • At December 31, 2016, the Company had rental equipment of
    approximately $3.56 billion at original equipment cost (OEC). Average
    OEC for the full year increased 3.4% compared to the prior year.
    Average fleet age was approximately 48 months as of December 31, 2016.

Bond Redemption

Under the terms of the indenture for its senior notes, the Company gave
notice of the redemption of $61.0 million in aggregate principal amount
of the 2022 senior notes and $62.5 million in aggregate principal amount
of the 2024 senior notes at a redemption price of 103% of the aggregate
principal amount plus accrued and unpaid interest. The Company intends
to draw down on its asset-backed loan facility to fund the redemption
price. The redemption date will be March 10, 2017.

2017 Guidance

"Our 2017 guidance is based on a 3.5% growth rate in the North American
equipment market and the anticipated positive impact of our strategic
initiatives. We plan to continue to adjust our fleet mix as we grow the
fleet during the year and drive improvement in our utilization rates. We
are confident that we have the right strategy and the right fleet plan
to take advantage of market growth while improving our profitability and
achieving adjusted EBITDA growth," added Silber.

Based on the Company's planning assumptions, full year 2017 guidance is
as follows:

  • Adjusted EBITDA is expected to be in the range of $550 to $590 million.
  • Net fleet capital expenditures are expected to be in the range of $275
    million to $325 million.

The Company does not provide forward-looking guidance for certain
financial measures on a GAAP basis or a reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable GAAP reported financial measures on a forward-looking basis
because it is unable to predict certain items contained in the GAAP
measures without unreasonable efforts. Certain items that impact net
income (loss) cannot be predicted with reasonable certainty, such as
restructuring and restructuring related charges, special tax items,
borrowing levels (which affect interest expense), gains and losses from
asset sales, the ultimate outcome of pending litigation and spin-related
costs.

Earnings Call and Webcast Information

Herc Holdings' fourth quarter 2016 earnings webcast will be held on
March 1, 2017, at 8:30 a.m. U.S. Eastern Time. Interested U.S. parties
may call +1-877-883-0383 and international participants should call
+1-412-902-6506, using the access code: 0404317. Please dial in at least
10 to 15 minutes before the call start time to ensure that you are
connected to the call and to register your name and company.

Those who wish to listen to the live conference call and view the
accompanying presentation slides should visit the Events and
Presentations tab of the Investor Relations section of the Company's
website at IR.HercRentals.com.
The press release and presentation slides for the call will be posted to
this section of the website prior to the call.

A replay of the conference call will be available via webcast on the
company website at IR.HercRentals.com,
where it will be archived for two weeks after the call. A telephonic
replay will be available for one week. To listen to the archived call by
telephone, U.S. participants should dial + 1-877-344-7529 and
international participants + 1-412-317-0088 and enter conference ID
number 10099578.

About Herc Holdings Inc.

Herc Holdings Inc., which operates through its Herc Rentals Inc.
subsidiary, is one of the leading equipment rental suppliers with
approximately 270 company-operated locations, principally in North
America. With more than 50 years of experience, Herc Holdings is a
full-line equipment-rental supplier in key markets, including commercial
and residential construction, industrial and manufacturing, civil
infrastructure, automotive, government and municipalities, energy,
remediation, emergency response, facilities, entertainment and
agriculture, as well as refineries and petrochemicals. The equipment
rental business is supported by ProSolutions™ (our industry-specific
solutions-based services), and our professional grade tools, commercial
vehicles, and pump, power and climate control product offerings, all of
which are aimed at helping customers work more efficiently, effectively
and safely. The Company has approximately 4,800 employees. Herc
Holdings' 2016 total revenues were approximately $1.6 billion. All
references to "Herc Holdings" or the "Company" in this press release
refer to Herc Holdings Inc. and its subsidiaries, unless otherwise
indicated. For more information on Herc Holdings and its products and
services, visit: www.HercRentals.com.

Certain Additional Information

In this release we refer to the following operating measures:

  • Dollar utilization: calculated by dividing rental revenue by the
    average OEC of the equipment fleet for the relevant time period.
  • OEC: original equipment cost based on the guidelines of the American
    Rental Association, which is calculated as the cost of the asset at
    the time it was first purchased plus additional capitalized
    refurbishment costs (with the basis of refurbished assets reset at the
    refurbishment date).

Basis of Presentation

The financial results discussed in this press release are preliminary
and unaudited and subject to change as the Company's financial results
are finalized.

The financial information included in this press release is based upon
the condensed, consolidated and combined financial statements of the
Company which are presented on a basis of accounting that reflects a
change in reporting entity and have been adjusted for the effects of the
spin-off, which effected our separation from Hertz Rental Car Holding
Company, Inc. ("New Hertz"). These financial statements represent only
those operations, assets, liabilities and equity that form Herc Holdings
on a stand-alone basis. Since the spin-off occurred on June 30, 2016,
the financial statements represent the carve-out financial results for
the Company for the first six months of 2016, including spin-off impacts
through June 30, 2016, and actual results for the second half of 2016,
including the three months ended December 31, 2016. All prior period
amounts represent carve-out financial results.

Forward-Looking Statements

This release contains statements, including those under "2017 Guidance"
and "Bond Redemption" that are not statements of historical fact, but
instead are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. We caution readers not to
place undue reliance on these statements, which speak only as of the
date hereof. There are a number of risks, uncertainties and other
important factors that could cause our actual results to differ
materially from those suggested by our forward-looking statements,
including:

  • Risks related to material weaknesses in our internal control over
    financial reporting and the restatement of financial statements
    previously issued by Hertz Global Holdings, Inc. (in its form prior to
    the spin-off, "Hertz Holdings"), including that: we have identified
    material weaknesses in our internal control over financial reporting
    that may adversely affect our ability to report our financial
    condition and results of operations in a timely and accurate manner,
    which may adversely affect investor and lender confidence in us and,
    as a result, the value of our common stock and our ability to obtain
    future financing on acceptable terms, and we may identify additional
    material weaknesses as we continue to assess our processes and
    controls as a stand-alone company with lower levels of materiality;
    such material weaknesses could result in a material misstatement of
    our consolidated and combined financial statements that would not be
    prevented or detected; we continue to expend significant costs and
    devote management time and attention and other resources to matters
    related to our internal control over financial reporting and Hertz
    Holdings' restatement, which could adversely affect our ability to
    execute our strategic plan; our efforts to design and implement an
    effective control environment may not be sufficient to remediate the
    material weaknesses or prevent future material weaknesses; our
    material weaknesses and Hertz Holdings' restatement could expose us to
    additional risks that could materially adversely affect our financial
    position, results of operations and cash flows, including as a result
    of events of default under the agreements governing our indebtedness
    and/or government investigations, regulatory inquiries and private
    actions; we may experience difficulties implementing new information
    technology systems to maintain our books and records and provide
    operational information to our management team; if we decide to not
    implement the new operational system for our back office processes, we
    could need to expense items that were previously capitalized, which
    could result in a substantial charge in our results of operations; we
    could experience disruptions to our control environment in connection
    with the relocation of our Shared Services Center, including as a
    result of the failure to retain key employees who possess specific
    knowledge or expertise necessary for the timely preparation of our
    financial statements; and Hertz Holdings' restatement has resulted in
    government investigations, books and records demands, and private
    litigation and could result in government enforcement actions and
    private litigation that could have a material adverse impact on our
    results of operations, financial condition, liquidity and cash flows;
  • Risks related to the spin-off, which effected our separation from New
    Hertz, such as: we receive certain transition services from New Hertz
    pursuant to the transition services agreement covering IT services and
    other areas, which impact our control environment and, therefore, our
    internal control over financial reporting; we have limited operating
    history as a stand-alone public company, and our historical financial
    information for periods prior to July 1, 2016, is not necessarily
    representative of the results that we would have achieved as a
    separate, publicly traded company, and may not be a reliable indicator
    of our future results; the liabilities we have assumed and will share
    with New Hertz in connection with the spin-off could have a material
    adverse effect on our business, financial condition and results of
    operations; if there is a determination that any portion of the
    spin-off transaction is taxable for U.S. federal income tax purposes,
    including for reasons outside of our control, then we and our
    stockholders could incur significant tax liabilities, and we could
    also incur indemnification liability if we are determined to have
    caused the spin-off to become taxable; if New Hertz fails to pay its
    tax liabilities under the tax matters agreement or to perform its
    obligations under the separation and distribution agreement, we could
    incur significant tax and other liability; our ability to engage in
    financings, acquisitions and other strategic transactions using equity
    securities is limited due to the tax treatment of the spin-off; the
    loss of the Hertz brand and reputation could materially adversely
    affect our ability to attract and retain customers; the spin-off may
    be challenged by creditors as a fraudulent transfer or conveyance; and
    if the spin-off is not a legal dividend, it could be held invalid by a
    court and have a material adverse effect on our business, financial
    condition and results of operations;
  • Business risks could have a material adverse effect on our business,
    results of operations, financial condition and/or liquidity, including:
  • the cyclicality of our business, a slowdown in economic conditions or
    adverse changes in the economic factors specific to the industries in
    which we operate, in particular industrial and construction;
  • the dependence of our business on the levels of capital investment and
    maintenance expenditures by our customers, which in turn are affected
    by numerous factors, including the level of economic activity in their
    industries, the state of domestic and global economies, global energy
    demand, the cyclical nature of their markets, expectations regarding
    government spending on infrastructure improvements or expansions,
    their liquidity and the condition of global credit and capital markets;
  • we may have difficulty obtaining the resources that we need to
    operate, or our costs to do so could increase significantly;
  • intense competition in the industry, including from our own suppliers,
    that may lead to downward pricing or an inability to increase prices;
  • any occurrence that disrupts rental activity during our peak periods
    given the seasonality of the business, especially in the construction
    industry;
  • doing business in foreign countries exposes us to additional risks,
    including under laws and regulations that may conflict with U.S. laws
    and those under anticorruption, competition, economic sanctions and
    anti-boycott regulations;
  • our success as an independent company will depend on our new senior
    management team, the ability of other new employees to learn their new
    roles, and our ability to attract and retain key management and other
    key personnel;
  • some or all of our deferred tax assets could expire if we experience
    an "ownership change" as defined in the Internal Revenue Code;
  • changes in the legal and regulatory environment that affect our
    operations, including with respect to taxes, consumer rights, privacy,
    data security and employment matters, could disrupt our business and
    increase our expenses;
  • an impairment of our goodwill or our indefinite lived intangible
    assets could have a material non-cash adverse impact;
  • other operational risks such as: any decline in our relations with our
    key national account customers or the amount of equipment they rent
    from us; our equipment rental fleet is subject to residual value risk
    upon disposition, and may not sell at the prices we expect; we may be
    unable to protect our trade secrets and other intellectual property
    rights; we may fail to respond adequately to changes in technology and
    customer demands; our business is heavily reliant upon communications
    networks and centralized information technology systems and the
    concentration of our systems creates or increases risks for us,
    including the risk of the misuse or theft of information we possess,
    including as a result of cyber security breaches or otherwise, which
    could harm our brand, reputation or competitive position and give rise
    to material liabilities; failure to maintain, upgrade and consolidate
    our information technology networks could materially adversely affect
    us; we may face issues with our union employees; we are exposed to a
    variety of claims and losses arising from our operations, and our
    insurance may not cover all or any portion of such claims;
    environmental, health and safety laws and regulations and the costs of
    complying with them, or any change to them impacting our customers'
    markets could materially adversely affect us; decreases in government
    spending could materially adversely affect us; maintenance and repair
    costs associated with our equipment rental fleet could materially
    adversely affect us; and strategic acquisitions could be difficult to
    identify and implement and could disrupt our business or change our
    business profile significantly;
  • Risks related to our substantial indebtedness, such as: our
    substantial level of indebtedness exposes us or makes us more
    vulnerable to a number of risks that could materially adversely affect
    our financial condition, results of operations, cash flows, liquidity
    and ability to compete; the secured nature of our indebtedness, which
    is secured by substantially all of our consolidated assets, could
    materially adversely affect our business and holders of our debt and
    equity; an increase in interest rates or in our borrowing margin would
    increase the cost of servicing our debt and could reduce our
    profitability; and any additional debt we incur could further
    exacerbate these risks;
  • Risks related to the securities market and ownership of our stock,
    including that: the market price of our common stock may fluctuate
    significantly; the market price of our common stock could decline as a
    result of the sale or distribution of a large number of our shares or
    the perception that a sale or distribution could occur and these
    factors could make it more difficult for us to raise funds through
    future stock offerings; and provisions of our governing documents
    could discourage potential acquisition proposals and could deter or
    prevent a change in control; and
  • Other risks and uncertainties set forth in the Form 12b-25 filed with
    the SEC on March 1, 2017, the Company's Quarterly Form 10-Q for the
    quarter ended June 30, 2016 in Part II under Item 1A "Risk Factors"
    and in our other filings with the SEC.

All forward-looking statements are expressly qualified in their entirety
by such cautionary statements. We do not undertake any obligation to
release publicly any update or revision to any of the forward-looking
statements.

Information Regarding Non-GAAP Financial Measures

In addition to results calculated according to accounting principles
generally accepted in the United States ("GAAP"), the Company has
provided certain information in this release which is not calculated
according to GAAP ("non-GAAP"), such as adjusted EBITDA. Management uses
these non-GAAP measures to evaluate operating performance and
period-over-period performance of our core business without regard to
potential distortions, and believes that investors will likewise find
these non-GAAP measures useful in evaluating the Company's performance.
These measures are frequently used by security analysts, institutional
investors and other interested parties in the evaluation of companies in
our industry.

Non-GAAP measures should not be considered in isolation or as a
substitute for our reported results prepared in accordance with GAAP
and, as calculated, may not be comparable to similarly titled measures
of other companies. For the definitions of these terms, further
information about management's use of these measures as well as a
reconciliation of these non-GAAP measures to the most comparable GAAP
financial measures, please see the supplemental schedules that accompany
this release.

(See Accompanying Tables)

 
 
 
 
 

HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(In
millions, except per share data)

 
     

Three Months Ended

December 31,

   

Years Ended

December 31,

2016     2015 2016     2015
Revenues: (Unaudited) (Unaudited)
Equipment rentals $ 356.7 $ 359.2 $ 1,352.7 $ 1,411.7
Sales of revenue earning equipment 28.5 36.7 122.5 161.2
Sales of new equipment, parts and supplies 17.3 23.9 68.2 92.1
Service and other revenues 2.7   2.6   11.4   13.2  
Total revenues 405.2   422.4   1,554.8   1,678.2  
Expenses:
Direct operating 167.1 173.0 651.4 711.2
Depreciation of revenue earning equipment 95.4 86.1 350.5 343.7
Cost of sales of revenue earning equipment 32.4 36.4 144.0 146.8
Cost of sales of new equipment, parts and supplies 13.8 18.7 53.0 73.0
Selling, general and administrative 71.5 59.5 275.0 265.5
Restructuring 0.5 0.8 4.0 4.3
Interest expense, net 32.1 5.1 84.2 32.9
Other income, net (0.2 ) (52.3 ) (2.4 ) (56.1 )
Total expenses 412.6   327.3   1,559.7   1,521.3  
Income before income taxes (7.4 ) 95.1 (4.9 ) 156.9
Income tax expense (6.6 ) (16.9 ) (15.6 ) (45.6 )
Net income (loss) $ (14.0 ) $ 78.2   $ (20.5 ) $ 111.3  
Weighted average shares outstanding:
Basic 28.3 29.2 28.3 30.2
Diluted 28.3 29.2 28.3 30.2
Earnings (loss) per share:
Basic $ (0.49 ) $ 2.68 $ (0.72 ) $ 3.69
Diluted $ (0.49 ) $ 2.68 $ (0.72 ) $ 3.69
 
 
 
 
 
 

 

HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED AND COMBINED BALANCE SHEETS

(In millions)

 
     

December 31,

2016

   

December 31,

2015

ASSETS (Unaudited)
Cash and cash equivalents $ 11.6 $ 15.7
Restricted cash and cash equivalents 19.4 16.0
Receivables, net of allowance 293.3 287.8
Inventory 24.1 22.3
Prepaid expenses and other current assets 23.3 19.7
Total current assets 371.7 361.5
Revenue earning equipment, net 2,390.0 2,382.5
Property and equipment, net 272.0 246.6
Goodwill and intangible assets, net 394.9 391.5
Other long-term assets 34.7 14.9
Total assets $ 3,463.3 $ 3,397.0
LIABILITIES AND EQUITY
Current maturities of long-term debt $ 15.7 $ 10.2
Loans payable to affiliates 73.2
Accounts payable 139.0 109.5
Accrued liabilities 78.6 47.8
Taxes payable 10.0 41.6
Total current liabilities 243.3 282.3
Long-term debt 2,178.6 53.3
Deferred taxes 687.4 727.3
Other long-term liabilities 31.6 32.1
Total liabilities 3,140.9 1,095.0
Total equity 322.4 2,302.0
Total liabilities and equity $ 3,463.3 $ 3,397.0
 
 
 
 
 
 
 

HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOW

(In
millions)

 
      Years Ended December 31,
2016     2015
(Unaudited)  
Net cash provided by operating activities 449.7   496.3  
Cash flows from investing activities:
Revenue earning equipment expenditures (468.3 ) (600.0 )
Proceeds from disposal of revenue earning equipment 115.4 151.9
Non-rental capital expenditures (47.8 ) (76.9 )
Proceeds from disposal of property and equipment 5.7 6.0
Proceeds from disposal of business 126.4
Other investing activities, net (3.4 ) 2.8  
Net cash used in investing activities (398.4 ) (389.8 )
Cash flows from financing activities:
Proceeds from issuance of long-term debt and revolving line of credit 3,026.0 1,865.0
Repayments on revolving line of credit (881.0 ) (2,208.6 )
Net financing activities with THC and affiliates (2,155.6 ) 852.6
Payment of debt issuance costs (41.5 )
Purchase of treasury stock (604.5 )
Other financing activities, net (2.9 ) (9.9 )
Net cash used in financing activities (55.0 ) (105.4 )
Effect of foreign exchange rate changes on cash and cash equivalents (0.4 ) (4.3 )

Net decrease in cash and cash equivalents during the period

(4.1 ) (3.2 )
Cash and cash equivalents at beginning of period 15.7   18.9  
Cash and cash equivalents at end of period $ 11.6   $ 15.7  
 
 
 
 
 
 
 

HERC HOLDINGS INC. AND SUBSIDIARIES
SUPPLEMENTAL
SCHEDULES

EBITDA AND ADJUSTED EBITDA RECONCILIATIONS
Unaudited

EBITDA and adjusted EBITDA are not recognized terms under GAAP and
should not be considered in isolation or as a substitute for our
reported results prepared in accordance with GAAP. Further, since all
companies do not use identical calculations, our definition and
presentation of these measures may not be comparable to similarly titled
measures reported by other companies.

EBITDA and Adjusted EBITDA - EBITDA represents the sum of
net income (loss), provision for income taxes, interest expense, net,
depreciation of revenue earning equipment and non-rental depreciation
and amortization. Adjusted EBITDA represents EBITDA plus the sum of
merger and acquisition related costs, restructuring and restructuring
related charges, spin-off costs, non-cash stock based compensation
charges, loss on extinguishment of debt, impairment charges, gain on the
disposal of a business and certain other items. Management uses EBITDA
and adjusted EBITDA to evaluate operating performance and
period-over-period performance of our core business without regard to
potential distortions, and believes that investors will likewise find
these non-GAAP measures useful in evaluating the Company's performance.
These measures are frequently used by security analysts, institutional
investors and other interested parties in the evaluation of companies in
our industry. However, EBITDA and adjusted EBITDA do not purport to be
alternatives to net earnings as an indicator of operating performance.
Additionally, neither measure purports to be an alternative to cash
flows from operating activities as a measure of liquidity, as they do
not consider certain cash requirements such as interest payments and tax
payments. The reconciliation of EBITDA and adjusted EBITDA to net income
(loss) is presented below (in millions):

 
     

Three Months Ended

December 31,

   

Years Ended

December 31,

2016     2015 2016     2015
Net income (loss) $ (14.0 ) $ 78.2 $ (20.5 ) $ 111.3
Provision for income taxes 6.6 16.9 15.6 45.6
Interest expense, net 32.1 5.1 84.2 32.9
Depreciation of revenue earning equipment 95.4 86.1 350.5 343.7
Non-rental depreciation and amortization 11.9   19.1   44.8   77.2  
EBITDA 132.0   205.4   474.6   610.7  
Restructuring charges 0.5 0.8 4.0 4.3
Restructuring related charges (1) 1.4 2.9 8.0
Spin-Off costs 11.5 6.1 49.2 25.8
Non-cash stock-based compensation charges 1.7 0.4 5.5 2.7
Gain on disposal of business (50.9 ) (50.9 )
Other   0.6      
Adjusted EBITDA $ 145.7   $ 163.8   $ 536.2   $ 600.6  
 

(1) Represents incremental costs incurred directly
supporting restructuring initiatives.

 
 
 
 
 
 
 

HERC HOLDINGS INC. AND SUBSIDIARIES
SUPPLEMENTAL
SCHEDULES

NET REVENUE EARNING EQUIPMENT EXPENDITURES

 
      Years Ended December 31,

(in millions)

2016     2015
(Unaudited)
Revenue earning equipment expenditures $ 468.3 $ 600.0
Disposals of revenue earning equipment (115.4 ) (151.9 )
Net revenue earning equipment expenditures $ 352.9   $ 448.1  
 
 
 
 

View Comments and Join the Discussion!
 

Partner Center