Market Overview

Herc Holdings Reports Second Quarter and First Half Results

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  • Achieves 11.9% organic growth in equipment rental revenue to $392.5
    million, with average fleet growth of 5.7%, in the second quarter of
    2018 over the prior year
  • Reports pricing improved 2.9% in the second quarter of 2018, the ninth
    consecutive quarter of year-over-year improvement
  • Increases dollar utilization 140 basis points to 35.4% in the second
    quarter versus 2017
  • Affirms 2018 adjusted EBITDA guidance range of $630 million to $660
    million
  • Achieves operational independence from Hertz in July 2018 with the
    final separation of information technology systems

Herc Holdings Inc. (NYSE:HRI) ("Herc Holdings" or the "Company") today
reported financial results for the quarter ended June 30, 2018.
Equipment rental revenue was $392.5 million and total revenues were
$485.5 million in the second quarter of 2018, up from $350.8 million and
$415.8 million, respectively, for the same period last year. The
Company's net results improved by $27.3 million to a net loss of $0.3
million, or $0.01 per diluted share, in the second quarter of 2018,
compared to a net loss of $27.6 million, or $0.98 per diluted share, in
the same period in 2017.

Equipment rental revenue increased 11.9%, average fleet at original
equipment cost (OEC) increased 5.7% and overall pricing improved 2.9% in
the second quarter of 2018 over the prior-year period. Adjusted EBITDA
increased 14.4% to $152.2 million in the second quarter compared to
$133.1 million in the comparable period in 2017. See page A-4 for a
description of the items excluded in calculating adjusted EBITDA.

"Our focus on fleet, customer and local market diversification continued
to drive strong organic rental revenue growth across North America in
the second quarter," said Larry Silber, president and chief executive
officer. "We delivered our fourth consecutive quarter of double-digit
growth in equipment rental revenue over the prior-year period,
benefiting from improved volume, mix and price.

"We also completed the final separation of our financial information
technology systems from Hertz at the end of July. The successful
completion of this project means we no longer use any support services
from our former parent and establishes our independence. With the final
separation now behind us, our full attention and resources can be
applied to operational improvements."

Second Quarter Highlights

  • Equipment rental revenue in the second quarter of 2018 increased
    11.9%, or $41.7 million, to $392.5 million compared to $350.8 million
    in the prior-year quarter. The double-digit gain reflected strong
    growth in rental revenue from local accounts, and ProSolutionsTM
    and ProContractor categories over the prior year.
  • Total revenues increased 16.8% to $485.5 million in the second quarter
    compared to $415.8 million in 2017. The $69.7 million year-over-year
    improvement included an increase in sales of revenue earning equipment
    of $31.8 million. The Company benefited from a strong used equipment
    market as it continued to focus on improving equipment mix and
    reducing fleet age.
  • Pricing increased 2.9% in the second quarter of 2018 compared to the
    same period in 2017, and represented the ninth consecutive quarter of
    year-over-year improvement.
  • Adjusted EBITDA in the second quarter of 2018 increased 14.4% to
    $152.2 million compared to $133.1 million in the second quarter of
    2017. The increase reflected strong rental revenue growth in the
    quarter and improved pricing in the used equipment market.
  • Dollar utilization of 35.4% in the second quarter of 2018 was up 140
    basis points compared to the prior-year period, reflecting customer
    and fleet mix diversification and improved pricing.
  • Direct operating expenses were $194.5 million in the second quarter of
    2018 compared to $168.6 million in the prior-year period, primarily
    due to increased fleet and related expenses associated with higher
    equipment rental activity.
  • Selling, general and administrative (SG&A) expenses decreased $1.5
    million to $77.3 million in the second quarter of 2018 compared to
    $78.8 million in the prior-year period. The year-over-year decline
    resulted primarily from the reduction of professional fees and costs
    related to the spin-off. These decreases were partially offset by an
    increase in sales personnel and related commissions to drive revenue
    growth.
  • Interest expense in the second quarter of 2018 increased to $32.4
    million compared to $31.6 million in the prior-year period, primarily
    due to an increase in average outstanding borrowings and a higher
    average interest rate on the revolving credit facility during the
    quarter, compared with the same period last year. The increase was
    partially offset by lower average outstanding borrowings on senior
    secured second priority notes during the second quarter of 2018 as
    compared to the prior-year period.
  • Net results improved $27.3 million to a net loss of $0.3 million in
    the second quarter of 2018 compared to a net loss of $27.6 million in
    the second quarter of 2017. Improved operating results and the
    prior-year's pretax impairment of $29.3 million, due to the write-off
    of intangible assets related to the development of information
    technology systems, were the primary factors.

First Half Highlights

  • Equipment rental revenue in the first half of 2018 increased 13.4%, or
    $90.2 million, to $761.6 million compared to $671.4 million in the
    prior-year quarter. The double-digit growth reflected strong growth in
    rental revenue from local accounts, and ProSolutionsTM and
    ProContractor categories.
  • Total revenues increased 13.9% to $916.8 million in the first half
    compared to $805.2 million in 2017. The $111.6 million year-over-year
    increase was aided by an increase in sales of revenue earning
    equipment of $24.7 million. The Company benefited from a strong used
    equipment market as it continued to focus on improving equipment mix
    and reducing fleet age.
  • Pricing increased 2.8% in the first half of 2018 compared to the same
    period in 2017.
  • Adjusted EBITDA in the first half of 2018 increased 23.4% to $284.9
    million compared to $230.9 million in the first half of 2017. The
    increase was primarily due to strong rental revenue growth and
    improved pricing in the used equipment market.
  • Direct operating expenses were $390.5 million in the first half of
    2018 compared to $337.5 million in the prior-year period, primarily
    due to increased fleet and related expenses associated with higher
    equipment rental activity.
  • Selling, general and administrative expense decreased $8.1 million to
    $151.8 million in the first half of 2018 compared to $159.9 million in
    the prior-year period. The year-over-year decline resulted primarily
    from the reduction of professional fees and costs related to the
    spin-off. These decreases were partially offset by an increase in
    sales personnel and related commissions to drive revenue growth.
  • Interest expense in the first half of 2018 declined $5.0 million to
    $64.4 million from $69.4 million in the prior-year period primarily
    due to the absence of costs incurred for the partial redemption of the
    Company's senior secured second priority notes in March of 2017.
  • Net results improved $56.4 million to a net loss of $10.4 million in
    the first half of 2018 compared to a net loss of $66.8 million in the
    comparable prior-year period. Improved operating results and a pretax
    impairment of $29.3 million in the prior-year second quarter, due to
    the write-off of intangible assets related to the development of new
    information technology systems, were the primary factors.

Capital Expenditures - Fleet

  • The Company reported net fleet capital expenditures of $170.4 million
    for the first half of 2018. Gross fleet capital expenditures were
    $300.5 million, and disposals were $130.1 million. See page A-5 for
    the calculation of net fleet capital expenditures.
  • As of June 30, 2018, the Company's total fleet was approximately $3.87
    billion at OEC, based on the American Rental Association guidelines.
  • Average fleet at OEC increased 5.7% in the second quarter and 4.5% in
    the first half compared to the prior-year periods.
  • Average fleet age declined to approximately 46 months as of June 30,
    2018, compared with approximately 48 months in the prior-year period.

2018 Guidance

The Company affirmed its 2018 adjusted EBITDA and net fleet capital
expenditures guidance.

Adjusted EBITDA           $630 million to $660 million
 
Net fleet capital expenditures $525 million to $575 million

The Company does not provide forward-looking guidance for certain
financial measures on a GAAP basis because certain items contained in
the GAAP measures, which may be significant, cannot be reasonably
estimated, such as restructuring and restructuring related charges,
special tax items, gains and losses from asset sales and the ultimate
outcome of pending litigation.

Subsequent Event

On July 12, 2018, for the redemption period from June 1, 2018 to May 31,
2019, the Company redeemed $61 million in aggregate principal amount of
the 7.5% senior secured second priority notes due 2022 and $62.5 million
of the 7.75% senior secured second priority notes due 2024 at a
redemption price of 103% plus accrued and unpaid interest. The Company
had originally issued $610 million of the 2022 notes and $625 million of
the 2024 notes in June 2016, and redeemed 10% of the original aggregate
principal amount of each series of notes in both March 2017 and October
2017.

Earnings Call and Webcast Information

Herc Holdings' second quarter 2018 earnings webcast will be held today
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: 9331261. Please dial in at least
10 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 90
days 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 the replay access code: 10121581.

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 275 locations, principally in North America. With over 50
years of experience, we are a full-line equipment rental supplier
offering a broad portfolio of equipment for rent. Our classic fleet
includes aerial, earthmoving, material handling, trucks and trailers,
air compressors, compaction and lighting. Our equipment rental business
is supported by ProSolutionsTM, our industry-specific
solutions-based services, which includes pumping solutions, power
generation, climate control, remediation and restoration, and studio and
production equipment, and our ProContractor professional grade tools.
Our product offerings and services are aimed at helping customers work
more efficiently, effectively and safely. The Company has approximately
4,900 employees. Herc Holdings' 2017 total revenues were approximately
$1.75 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).

Forward-Looking Statements

This release contains statements, including those under "2018 Guidance,"
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 that effected the separation of the car rental business
    from us, "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; our efforts to design and implement an effective
    control environment may not be sufficient to remediate the material
    weaknesses, or to prevent future material weaknesses; such material
    weaknesses could result in a material misstatement of our consolidated
    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; our material weaknesses could expose
    us to additional risks that could materially adversely affect our
    ability to execute our strategic plan and our financial position,
    results of operations and cash flows; any significant disruption or
    deficiency in the design of or implementing new information technology
    ("IT") systems, including the financial system migrated from Hertz
    Rental Car Holding Company, Inc., which has been re-named Hertz Global
    Holdings, Inc. ("New Hertz"), could materially adversely affect our
    ability to accurately maintain our books and records or otherwise
    operate our business; and Hertz Holdings' restatement has been costly
    and has resulted in government investigations and other legal actions,
    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;
  • 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 and its dependence on levels of
      capital investment and maintenance expenditures by our customers;
      a slowdown in economic conditions or adverse changes in the level
      of economic activity or other economic factors specific to our
      customers or their industries, in particular, contractors and
      industrial customers;
    • our business is heavily reliant upon communications networks and
      centralized IT 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;
    • we may fail to maintain, upgrade and consolidate our IT networks;
    • we may fail to respond adequately to changes in technology and
      customer demands;
    • intense competition in the industry, including from our own
      suppliers, that may lead to downward pricing or an inability to
      increase prices;
    • our success depends on our ability to attract and retain key
      management and other key personnel, and the ability of new
      employees to learn their new roles;
    • we may have difficulty obtaining the resources that we need to
      operate, or our costs to do so could increase significantly;
    • 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;
    • 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; maintenance and repair costs associated with our equipment
      rental fleet could materially adversely affect us; we may be
      unable to protect our trade secrets and other intellectual
      property rights; 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; we may face issues with our union
      employees; environmental, health and safety laws and regulations
      and the costs of complying with them, or any change to them
      impacting our markets, 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 the spin-off, which effected our separation from New
    Hertz, such as: 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; 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; 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; and the spin-off
    may be challenged by creditors as a fraudulent transfer or conveyance;
  • 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 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; provisions of our governing documents could
    discourage potential acquisition proposals and could deter or prevent
    a change in control; and the market price of our common stock may
    fluctuate significantly; and
  • Other risks and uncertainties set forth in our Annual Report on Form
    10-K for the year ended December 31, 2017 under Item 1A "Risk
    Factors," and in our other filings with the Securities and Exchange
    Commission.

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.

HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions, except per share data)
 
  Three Months Ended June 30,   Six Months Ended June 30,
2018   2017 2018   2017
Revenues:
Equipment rental $ 392.5 $ 350.8 $ 761.6 $ 671.4
Sales of revenue earning equipment 78.2 46.4 125.5 100.8
Sales of new equipment, parts and supplies 10.8 14.9 22.2 26.4
Service and other revenue 4.0   3.7   7.5   6.6  
Total revenues 485.5   415.8   916.8   805.2  
Expenses:
Direct operating 194.5 168.6 390.5 337.5
Depreciation of revenue earning equipment 97.0 94.3 190.3 187.2
Cost of sales of revenue earning equipment 75.8 51.4 117.8 106.3
Cost of sales of new equipment, parts and supplies 8.1 11.1 17.1 19.5
Selling, general and administrative 77.3 78.8 151.8 159.9
Impairment 0.1 29.3 0.1 29.3
Interest expense, net 32.4 31.6 64.4 69.4
Other income, net (0.2 ) 0.5   (0.5 ) 0.2  
Total expenses 485.0   465.6   931.5   909.3  
Income (loss) before income taxes 0.5 (49.8 ) (14.7 ) (104.1 )
Income tax benefit (provision) (0.8 ) 22.2   4.3   37.3  
Net loss $ (0.3 ) $ (27.6 ) $ (10.4 ) $ (66.8 )
Weighted average shares outstanding:
Basic and diluted 28.4 28.3 28.4 28.3
Loss per share:
Basic and diluted $ (0.01 ) $ (0.98 ) $ (0.37 ) $ (2.36 )
 
HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
   

June 30,
2018

December 31,

2017

ASSETS (Unaudited)
Cash and cash equivalents $ 44.0 $ 41.5
Receivables, net of allowance 350.3 386.3
Inventory 20.7 23.7
Prepaid and other current assets 20.6   23.0
Total current assets 435.6   474.5
Revenue earning equipment, net 2,585.4 2,374.6
Property and equipment, net 286.2 286.3
Goodwill and intangible assets, net 380.3 374.9
Other long-term assets 42.1   39.4
Total assets $ 3,729.6   $ 3,549.7
LIABILITIES AND EQUITY
Current maturities of long-term debt and financing obligations $ 26.9 $ 25.4
Accounts payable 387.8 152.0
Accrued liabilities 103.8   113.3
Total current liabilities 518.5   290.7
Long-term debt, net 2,109.6 2,137.1
Financing obligations, net 111.5 112.9
Deferred tax liabilities 458.2 462.8
Other long-term liabilities 36.5   35.8
Total liabilities 3,234.3   3,039.3
Total equity 495.3   510.4
Total liabilities and equity $ 3,729.6   $ 3,549.7
 
HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)
 
  Six Months Ended June 30,
2018   2017
Cash flows from operating activities:
Net loss $ (10.4 ) $ (66.8 )
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation of revenue earning equipment 190.3 187.2
Depreciation of property and equipment 25.4 22.1
Amortization of intangible assets 2.1 2.2
Amortization of deferred debt and financing obligations costs 3.1 3.2
Stock-based compensation charges 6.6 4.5
Impairment 0.1 29.3
Provision for receivables allowance 24.1 21.9
Deferred taxes (4.3 ) (37.3 )
(Gain) loss on sale of revenue earning equipment (7.7 ) 5.5
Income from joint ventures (0.9 ) (0.7 )
Other 5.8 0.7
Changes in assets and liabilities:
Receivables (1.4 ) (31.7 )
Inventory, prepaid and other assets (0.8 ) (2.3 )
Accounts payable 10.6 (15.6 )
Accrued liabilities and other long-term liabilities (9.7 ) 4.1  
Net cash provided by operating activities 232.9   126.3  
Cash flows from investing activities:
Revenue earning equipment expenditures (300.5 ) (160.8 )
Proceeds from disposal of revenue earning equipment 130.1 88.6
Non-rental capital expenditures (33.2 ) (26.0 )
Proceeds from disposal of property and equipment 2.4   1.7  
Net cash used in investing activities (201.2 ) (96.5 )
Cash flows from financing activities:
Repayments of long-term debt (123.5 )
Proceeds from revolving lines of credit 186.0 279.4
Repayments on revolving lines of credit (204.7 ) (183.7 )
Principal payments under capital lease and financing obligations (8.9 ) (7.8 )
Debt extinguishment costs (3.7 )
Other financing activities, net 0.3   0.3  
Net cash used in financing activities (27.3 ) (39.0 )
Effect of foreign exchange rate changes on cash, cash equivalents
and restricted cash
(1.9 ) 0.5  
Net increase (decrease) in cash, cash equivalents and restricted
cash during the period
2.5 (8.7 )
Cash, cash equivalents and restricted cash at beginning of period 41.5   31.0  
Cash, cash equivalents and restricted cash at end of period $ 44.0   $ 22.3  
 
Supplemental disclosure of non-cash investing activity:
Purchases of revenue earning equipment in accounts payable $ 223.7 $ 176.9
Non-rental capital expenditures in accounts payable $ 3.6 $ 13.2
 

HERC HOLDINGS INC. AND SUBSIDIARIES

SUPPLEMENTAL SCHEDULES

EBITDA AND ADJUSTED EBITDA RECONCILIATIONS

Unaudited

(In millions)

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 (benefit) 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 (which is included
in interest expense, net), 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:

  Three Months Ended June 30,   Six Months Ended June 30,
2018   2017 2018   2017
Net loss $ (0.3 ) $ (27.6 ) $ (10.4 ) $ (66.8 )
Income tax provision (benefit) 0.8 (22.2 ) (4.3 ) (37.3 )
Interest expense, net 32.4 31.6 64.4 69.4
Depreciation of revenue earning equipment 97.0 94.3 190.3 187.2
Non-rental depreciation and amortization 13.7   12.6   27.5   24.3  
EBITDA 143.6   88.7   267.5   176.8  
Restructuring and restructuring related 2.2 1.0 2.8
Spin-Off costs 3.9 9.1 8.8 16.7
Non-cash stock-based compensation charges 3.8 3.0 6.6 4.5
Impairment 0.1 29.3 0.1 29.3
Other(1) 0.8   0.8   0.9   0.8  
Adjusted EBITDA $ 152.2   $ 133.1   $ 284.9   $ 230.9  
 

(1) Comprised primarily of a one-time cash separation benefit paid to
our former Chief Financial Officer as part of her Retirement and
Separation Agreement for the three and six months ended June 30, 2018
and transaction costs for the three and six months ended June 30, 2017.

HERC HOLDINGS INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULES
NET REVENUE EARNING EQUIPMENT EXPENDITURES
Unaudited
(In millions)

 

              Six Months Ended June 30,
2018   2017
Revenue earning equipment expenditures $ 300.5 $ 160.8
Proceeds from disposals of revenue earning equipment (130.1 ) (88.6 )
Net revenue earning equipment expenditures $ 170.4   $ 72.2  

 

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