Herc (HRI) Morgan Stanley‘s 12th Annual Laguna Conference 2024 summary

Company overview and strategy

• Operates as a leading North American equipment rental supplier, present in 42 states and five Canadian provinces.

• Focused on profitable growth through investments in fleet, technology, and specialty businesses.

• Specialty fleet now represents about 23% of total, with plans to grow to 25-30% over the next three years.

• Maintains a diverse customer base, with no single market or customer accounting for more than 10% or 3% of revenue, respectively.

• Strong capital management, with ongoing dividends and disciplined investment for shareholder returns.

Market environment and growth drivers

• Market is normalizing post-COVID, with local markets impacted by higher interest rates.

• Federal infrastructure spending and mega projects (EV, data centers, LNG) are creating a "new normal" and long-term growth runway.

• Mega projects are in early stages, expected to drive strong demand for at least five years, with some projects extending further.

• Building new customer relationships through participation in select mega projects, aiming for long-term engagement.

Operational transformation and financial performance

• Refocused from global to North American operations, exited non-core geographies.

• Streamlined fleet, consolidated vendor base, and upgraded systems to improve efficiency and margins.

• Expanded salesforce and shifted to a sales-driven culture, targeting top 100 MSAs.

• Achieved record second quarter, reflecting operational improvements and market leadership.