Q4 2019 Earnings Call

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Good day and welcome to the her holdings incorporated fourth quarter 2019 earnings Conference call Today's conference is being recorded.

Operator: Good day, and welcome to the Herc Holdings Inc. Q4 2019 earnings conference call. Today's conference is being recorded. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. I would now like to turn the conference over to Elizabeth Higashi. Please go ahead, ma'am.

After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then too I would now like to turn the conference I wish to Elizabeth Gosh. Please go ahead Mark.

Elizabeth Higashi: Thank you, Rochelle, and good morning, everyone. Welcome to our Q4 and Full Year 2019 Earnings Conference Call. Our press release, presentation slides, and Form 10-K were filed earlier today and are posted on the events page of our IR website at ir.hercrentals.com. This morning, I'm joined by Larry Silber, President and Chief Executive Officer, Aaron Birnbaum, Senior Vice President and Chief Operating Officer, and Mark Irion, Senior Vice President and Chief Financial Officer. They will review the Q4 and the year-end results as well as our strategic outlook. The prepared remarks will be followed by an open Q&A. Before I turn the call over to Larry, there are a few items I'd like to cover. First, today's conference call will include forward-looking statements. These statements are based on the environment as we see it today and therefore involve risks and uncertainties.

Elizabeth Higashi: Thank you, Rochelle, and good morning, everyone. Welcome to our Q4 and Full Year 2019 Earnings Conference Call. Our press release, presentation slides, and Form 10-K were filed earlier today and are posted on the events page of our IR website at ir.hercrentals.com. This morning, I'm joined by Larry Silber, President and Chief Executive Officer, Aaron Birnbaum, Senior Vice President and Chief Operating Officer, and Mark Irion, Senior Vice President and Chief Financial Officer. They will review the Q4 and the year-end results as well as our strategic outlook. The prepared remarks will be followed by an open Q&A. Before I turn the call over to Larry, there are a few items I'd like to cover. First, today's conference call will include forward-looking statements. These statements are based on the environment as we see it today and therefore involve risks and uncertainties.

Thank you ever shell and good morning, everyone welcome to our fourth quarter and for your 20, Nike Inc. earnings Conference call. Our press release presentations Black than 10-K were filed earlier today and are posted on the advanced stage of our IR website, if I heard about her green Dot com.

Good morning, I'm joined by Mary Gilbert, President and Chief Executive Officer, and Birnbaum, Senior Vice President and Chief Operating Officer, Mark theory on senior Vice President and Chief Financial Officer.

They will review the fourth quarter in here in adult developer strategic outlook. The prepared remarks will be followed by an open to any.

Before I turn the call over to Larry There are few items I'd like to cover first today's conference call will include forward looking statement.

Statements are based on the environment that we see it today and therefore involve risks and uncertainties I would talk to use our actual results could differ materially. Some forward looking statements made on his call.

Elizabeth Higashi: I would caution you that our actual results could differ materially from the forward-looking statements made on this call. Please refer to slide 2 of the presentation for our complete safe harbor statement, as well as the risk factor section of our annual report on Form 10-K for the year ended December 31, 2019. 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 material. Finally, a replay of this call can be accessed via dial-in or through a webcast on our website. Replay instructions were included in our earnings release this morning.

Elizabeth Higashi: I would caution you that our actual results could differ materially from the forward-looking statements made on this call. Please refer to slide 2 of the presentation for our complete safe harbor statement, as well as the risk factor section of our annual report on Form 10-K for the year ended December 31, 2019. 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 material. Finally, a replay of this call can be accessed via dial-in or through a webcast on our website. Replay instructions were included in our earnings release this morning.

The first like to other people Jason. Please please harbor statement Isabella perspective section or annual report on form 10-K for the year.

120 like team.

In addition to the natural results presented on a GAAP basis, we will be discussing non-GAAP information, but we believe as well.

The company operating performance.

Litigation for these non-GAAP measures to the closest GAAP equivalent can be found in the conference call material.

Finally, a replay of this call can be accessed via dollars or through a webcast on our website for replay instructions were included in our earnings release. This morning.

Elizabeth Higashi: We have not given permission for any other recording of this call and do not approve or sanction any transcribing of the call. I'll now turn the call over to Larry.

Elizabeth Higashi: We have not given permission for any other recording of this call and do not approve or sanction any transcribing of the call. I'll now turn the call over to Larry.

Not given permission for any other recording of this call and did not approve or sanction transcribing the call I'll now turn the call over to Larry.

Larry Silber: Thank you, Elizabeth, and thank you all for joining us this morning. Today, I'd like to officially welcome Aaron Birnbaum, our new Chief Operating Officer, to our call. Aaron has more than 30 years in the equipment rental industry, all of it with Herc. Most recently, he was responsible for operations in the West, and North Central regions of the United States, as well as Canada, and our Herc Entertainment Services and Cinelease operations. Aaron was also responsible for many of the acquisitions the company made as a division of Hertz, when he had responsibility for mergers, acquisitions, and strategy of the company. We've now completed 3.5 years as a public company.

Larry Silber: Thank you, Elizabeth, and thank you all for joining us this morning. Today, I'd like to officially welcome Aaron Birnbaum, our new Chief Operating Officer, to our call. Aaron has more than 30 years in the equipment rental industry, all of it with Herc. Most recently, he was responsible for operations in the West, and North Central regions of the United States, as well as Canada, and our Herc Entertainment Services and Cinelease operations. Aaron was also responsible for many of the acquisitions the company made as a division of Hertz, when he had responsibility for mergers, acquisitions, and strategy of the company. We've now completed 3.5 years as a public company.

Thank you I'm on the books and thank you all for joining us this morning.

I'd like to officially welcome earn Birnbaum, our new truck Chief operating officer to our coal burn is more than 30 years and you put my rental industry all of it what's her most recently he was responsible for operations on the west and North central regions of the United States as well is kinda and our Herc entertainment.

All these operations are on was also responsible for money of Yaki positions the company made.

The burden of hurt when you have responsibility for mergers.

Excellent and strategy as a company.

Now completed greenhouse appears as a public company their strategies in place when these bonds in mid 2016 provided the framework for improvement in profitability and cash flow and continues to provide the roadmap for our future activities.

Larry Silber: The strategy put in place when we spun in mid-2016 provided the framework for our improvement in profitability and cash flow and continues to provide the roadmap for our future activities. Last year, we continued to focus on quality of earnings and capital efficiency through the execution of company-wide self-help initiatives to increase our operating margins and profitability. Our strategic initiatives once again drove industry-leading year-over-year price improvements that contributed to higher adjusted EBITDA margins, dollar utilization, and positive free cash flow in the Q4 and full year. We're excited about 2020, which we expect to be another solid year. Industry metrics continue to be positive in the key areas of our interest, and our interactions with contractors and customers reinforce our continued belief that the markets in which we participate are stable and growing.

Larry Silber: The strategy put in place when we spun in mid-2016 provided the framework for our improvement in profitability and cash flow and continues to provide the roadmap for our future activities. Last year, we continued to focus on quality of earnings and capital efficiency through the execution of company-wide self-help initiatives to increase our operating margins and profitability. Our strategic initiatives once again drove industry-leading year-over-year price improvements that contributed to higher adjusted EBITDA margins, dollar utilization, and positive free cash flow in the Q4 and full year. We're excited about 2020, which we expect to be another solid year. Industry metrics continue to be positive in the key areas of our interest, and our interactions with contractors and customers reinforce our continued belief that the markets in which we participate are stable and growing.

Last year, we continue to focus on quality of earnings and capital efficiency through the execution of companywide self help initiatives to increase our operating margins and profitability.

Our strategic initiative was once again drove industry, leading year over year price improvement that contributed to higher adjusted EBITDA margin.

So utilization and positive free cash flow in the fourth quarter and full year. We're excited about 20, Twond, which we expect could be another solid year industry metrics continue to be positive and the key areas our interest in our interactions with contractors in customers reinforce our continued belief that the markets and worked.

We participate or stable and growing.

Oh structures are gonna <unk> on slide four servers, our roadmap to improve dollar utilization and EBITDA margins enhanced free cash flow and we do not loved ones.

Larry Silber: Our strategic initiatives on slide 4 serve as our roadmap to improve dollar utilization and EBITDA margins, enhance free cash flow, and reduce net leverage. We expect to continue to make annual year-over-year progress in these important financial metrics and are committed to closing the gap with our industry peers. Now please turn to slide 5 for a summary of our full-year financial results. Equipment rental revenue grew 2.6% to $1.7 billion. Our revenue growth in 2019 was focused on organic growth with a limited amount of fleet growth. We were consistently focused on pricing all year and led the industry with 4% fleet growth. Total revenues were nearly $2 billion, up 1.1% compared with last year.

Larry Silber: Our strategic initiatives on slide 4 serve as our roadmap to improve dollar utilization and EBITDA margins, enhance free cash flow, and reduce net leverage. We expect to continue to make annual year-over-year progress in these important financial metrics and are committed to closing the gap with our industry peers. Now please turn to slide 5 for a summary of our full-year financial results. Equipment rental revenue grew 2.6% to $1.7 billion. Our revenue growth in 2019 was focused on organic growth with a limited amount of fleet growth. We were consistently focused on pricing all year and led the industry with 4% fleet growth. Total revenues were nearly $2 billion, up 1.1% compared with last year.

We expect there continue to make our annual year over year progress in these important financial metrics and are committed to closing the gap in our industry peers.

Please turn to slide number five for a summary of our full year financial results.

Equipment rental revenue grew 2.6% to $1.7 billion or revenue growth in 2019 was focused on organic growth with a limited amount of fleet growth. We were consistently focused on pricing all year and led the industry <unk>, 4% like.

Total revenues were nearly $2 billion up 1.1% compared with last year.

Larry Silber: We reported net income of $47 and a half million for the full year or $1.63 per diluted share. Keep in mind that net income included one-time cost of $53.6 million from debt extinguishment related to the refinancing of our notes and our ABL credit facility. Adjusted EBITDA increased 8.2% to $741 million for the full year, reflecting success in our initiative to control direct operating expenses and SG&A. We actually cut our direct operating expenses and SG&A expenses in 2019, which created exceptional flow-through and margin expansion. Adjusted EBITDA margin was 37.1% for the full year, which was a 250 basis point improvement over the prior year. Now please turn to slide number six.

Larry Silber: We reported net income of $47 and a half million for the full year or $1.63 per diluted share. Keep in mind that net income included one-time cost of $53.6 million from debt extinguishment related to the refinancing of our notes and our ABL credit facility. Adjusted EBITDA increased 8.2% to $741 million for the full year, reflecting success in our initiative to control direct operating expenses and SG&A. We actually cut our direct operating expenses and SG&A expenses in 2019, which created exceptional flow-through and margin expansion. Adjusted EBITDA margin was 37.1% for the full year, which was a 250 basis point improvement over the prior year. Now please turn to slide number six.

Reported net income of 47, and a half million dollars.

Well you know at $1.63 per diluted share keep in mind that net income included onetime cost $53.6 million from debt extinguishment related to the refinancing of our notes and our HDL credit facility.

Adjusted EBITDA increased 8.2% good $741 million for the full year, reflecting success in our initiative to control direct operating expenses and that's Tonight, we actually cut our direct operating expenses are nice DNA expenses in 2019, what's created an exceptional flow through and.

Margin expansion adjusted EBITDA margin was 37.1% from a full year, which was a 250 basis point improvement over the prior year.

Please turn to slide number six.

Larry Silber: We've grown equipment rental revenue by a compound annual growth rate of 8% from 2016 to 2019, outperforming the industry growth of 5.5% over that same time period. Our revenue growth has been focused on organic growth and improved fleet utilization. Adjusted EBITDA grew 11.4% over the same time period, all with organic growth and our self-help initiatives to improve efficiency. Adjusted EBITDA margin has risen from a low of 33.4% in 2017 to 37.1% in 2019.

Larry Silber: We've grown equipment rental revenue by a compound annual growth rate of 8% from 2016 to 2019, outperforming the industry growth of 5.5% over that same time period. Our revenue growth has been focused on organic growth and improved fleet utilization. Adjusted EBITDA grew 11.4% over the same time period, all with organic growth and our self-help initiatives to improve efficiency. Adjusted EBITDA margin has risen from a low of 33.4% in 2017 to 37.1% in 2019.

Well the equipment rental revenue by a compound annual growth rate.

Aside from 2016 to 2019 outperforming the industry growth of 5.5% over that same time Korean.

Our revenue growth has been focused on organic growth and improved fleet utilization.

Adjusted EBITDA grew 11.4% over the same time period.

So with organic growth and our self help initiatives to improve efficiency.

Adjusted EBITDA margin has risen from a low of 33.4% in 2017% to 37.1% in 2019.

Larry Silber: We also reduced our net leverage from 4.1 times at the end of 2016 to 2.8 times as of December 31, 2019, below the midpoint of our targeted range of 2.5 to 3.5 times. Now, I'm going to ask Aaron to pick up from here to discuss our Q4 operating performance and his goals and priorities for the organization. Aaron?

Larry Silber: We also reduced our net leverage from 4.1 times at the end of 2016 to 2.8 times as of December 31, 2019, below the midpoint of our targeted range of 2.5 to 3.5 times. Now, I'm going to ask Aaron to pick up from here to discuss our Q4 operating performance and his goals and priorities for the organization. Aaron?

Also reduced our net leverage from 4.1 times at the end of 2016.

2.8 on December 31st 2019 below the midpoint of more targeted range of two and a half the three and half problems.

Now I'm going to ask her to pick up from here to discuss our fourth quarter operating performance and heavy golden priorities for the organization.

Thank you Larry I'm thrilled with the opportunity to help lead this trade organization I look forward to meeting many of our investors and analysts over the next several months.

Aaron Birnbaum: Thank you, Larry. I'm thrilled with the opportunity to help lead this great organization and look forward to meeting many of our investors and analysts over the next several months. Let's move on to our discussion of 2019 operating results on slide 8. I'd like to begin with safety, as it is one of our most important internal metrics and at the center of everything we do. In 2019, we continued to make strides in improving our safety record and reduced our total reportable incident rate to 0.84 in the United States, outperforming our target of less than 1.0 for the year. Throughout our locations, we also continue to focus on the simple concept of a perfect day, which means no OSHA reportable incidents, no at-fault motor vehicle accidents, and no DOT violations. We celebrate those locations who report a perfect safety month.

Aaron Birnbaum: Thank you, Larry. I'm thrilled with the opportunity to help lead this great organization and look forward to meeting many of our investors and analysts over the next several months. Let's move on to our discussion of 2019 operating results on slide 8. I'd like to begin with safety, as it is one of our most important internal metrics and at the center of everything we do. In 2019, we continued to make strides in improving our safety record and reduced our total reportable incident rate to 0.84 in the United States, outperforming our target of less than 1.0 for the year. Throughout our locations, we also continue to focus on the simple concept of a perfect day, which means no OSHA reportable incidents, no at-fault motor vehicle accidents, and no DOT violations. We celebrate those locations who report a perfect safety month.

Let's move onto our discussion of 2019 operating results on slide eight.

Let's begin with safety as is one of my most important internal metrics and at the center everything we do and 29 gene we continued to make strides in improving our safety record and reduced our total reportable incident rate to 0.84 in the United States outperforming our target of less than 1.0 for the year.

Not all locations. We also continue to focus on the simple concept.

The game, which means no osha recordable incidents no asphalt motor vehicle accidents and no giotti violations.

Celebrate dislocations reported perfect safety month.

Aaron Birnbaum: All of our branches reported at least 85% perfect days through Q4 2019, with many of our locations reporting 100% perfect days. Our goal is for continuous safety improvements throughout our entire organization. Slide nine illustrates the continuing improvements we made in Q4 2019 compared with 2018. The graph on the upper left illustrates our year-over-year pricing over the last two years, with the latest quarter up 3.3% over last year and up 4% for the full year. We have now increased rates for 15 consecutive quarters. This slide also shows average fleet at OEC was up 0.7% in Q4 2019 over last year.

Aaron Birnbaum: All of our branches reported at least 85% perfect days through Q4 2019, with many of our locations reporting 100% perfect days. Our goal is for continuous safety improvements throughout our entire organization. Slide nine illustrates the continuing improvements we made in Q4 2019 compared with 2018. The graph on the upper left illustrates our year-over-year pricing over the last two years, with the latest quarter up 3.3% over last year and up 4% for the full year. We have now increased rates for 15 consecutive quarters. This slide also shows average fleet at OEC was up 0.7% in Q4 2019 over last year.

All of our branches reported at least 85% perfect days during the fourth quarter 2019.

Many of our locations reporting 100% perfect days, our goals for continuous safety improvements throughout our entire organization.

Slide nine illustrates the continuing improvements we made in fourth quarter at 2019 compared to 2018 the graph on the upper left illustrates our year over year pricing over the last two years with the latest quarter up 3.3% over last year and up 4% for the full year, we've now increased rates for 15 consecutive quarters.

This slide also shows average fleet it always see was up 8.7% in the fourth quarter of 2019 over last year.

Aaron Birnbaum: Our disciplined approach from the beginning of 2019 was to control our fleet spend by focusing on higher dollar utilization categories and disposing older equipment. This resulted in average fleet size running flat year over year. Our average fleet on rent during Q4 of 2019 was down 1.3% compared with last year. With limited fleet growth, we have been focused on driving volume with improved utilization and efficiencies in our fleet management. We believe this was the right strategy in Q4 and are happy with the excellent rate growth and positive mix, but would have preferred better volume. We will continue to focus on volume growth in 2020 as we expect market conditions to remain favorable.

Aaron Birnbaum: Our disciplined approach from the beginning of 2019 was to control our fleet spend by focusing on higher dollar utilization categories and disposing older equipment. This resulted in average fleet size running flat year over year. Our average fleet on rent during Q4 of 2019 was down 1.3% compared with last year. With limited fleet growth, we have been focused on driving volume with improved utilization and efficiencies in our fleet management. We believe this was the right strategy in Q4 and are happy with the excellent rate growth and positive mix, but would have preferred better volume. We will continue to focus on volume growth in 2020 as we expect market conditions to remain favorable.

Our kids upland approach from the beginning of 2019 went to control our fleet spend by focusing on higher dollar utilization categories and disposing older equipment. This resulted in average sleek size running flat year over year.

Our average fleet on rent during the fourth quarter of 2019 was down 1.3% compared to last year. The eliminate lead growth. We have been focused on driving volume improved utilization any patient season, our fleet management.

We believe this was the white strategy in Q4 and are happy with excellent rate growth positive mix that would've preferred better volume. We will continue to focus on volume growth in 2020, as we expect market conditions to remain favorable.

Aaron Birnbaum: As a result of the improvement of pricing and mix, you can see the steady gains we have made year over year in dollar utilization. Q4 dollar utilization reached 40.5%, an increase of 80 basis points from a strong Q4 performance in 2018. Please turn to slide 10. Specialty includes ProSolutions and ProContractor and now accounts for approximately $837 million of OEC fleet or about 22% of our total fleet as of the end of 2019. Our core fleet of aerial, material handling, trucks and trailers, and earth-moving are also broken out on the slide. Average fleet age as of 31 December 2019 was 45 months, compared with 46 months for the same period last year. Please turn to slide 11.

Aaron Birnbaum: As a result of the improvement of pricing and mix, you can see the steady gains we have made year over year in dollar utilization. Q4 dollar utilization reached 40.5%, an increase of 80 basis points from a strong Q4 performance in 2018. Please turn to slide 10. Specialty includes ProSolutions and ProContractor and now accounts for approximately $837 million of OEC fleet or about 22% of our total fleet as of the end of 2019. Our core fleet of aerial, material handling, trucks and trailers, and earth-moving are also broken out on the slide. Average fleet age as of 31 December 2019 was 45 months, compared with 46 months for the same period last year. Please turn to slide 11.

As a result to be improving a pricing and mix you can see the steady gains we have made year over year in dollar utilization.

Fourth quarter goal utilization reached 40.5% an increase of 80 basis points from a strong fourth quarter performance in 2018.

Turning to slide 10.

Specially includes pro solutions are Procontractor and now accounts for approximately $837 million about we see fleet or about 22% of our total fleet.

The end of 2019, our core fleet, an aerial material handling trucks and trailers and earthmoving are also broken out on the slide.

Average fleet age as of December 30, Onest 2019 was 45 months compared with 46 months for the same period last year.

Let's turn to slide 11.

Aaron Birnbaum: Our rental revenue by major customer segment for 2019 is shown in the composition chart on the left side of the slide. Contractors represented 33% of equipment revenue, followed by industrial customers with 29%. Other customers represented 20%, and infrastructure and government increased to 18% of the total. National account revenue represented about 42% of the total for the full year and was down slightly compared with 2018. Local rental revenue for the full year increased 6% compared with 2018 and now represents 58% of the total rental revenue. Growth in new customer accounts continued to be solid throughout the year at both the local and national level. We are continuing to focus on maintaining a solid pipeline for future growth opportunities in all of our targeted end markets, as well as growing the portfolio of equipment.

Aaron Birnbaum: Our rental revenue by major customer segment for 2019 is shown in the composition chart on the left side of the slide. Contractors represented 33% of equipment revenue, followed by industrial customers with 29%. Other customers represented 20%, and infrastructure and government increased to 18% of the total. National account revenue represented about 42% of the total for the full year and was down slightly compared with 2018. Local rental revenue for the full year increased 6% compared with 2018 and now represents 58% of the total rental revenue. Growth in new customer accounts continued to be solid throughout the year at both the local and national level. We are continuing to focus on maintaining a solid pipeline for future growth opportunities in all of our targeted end markets, as well as growing the portfolio of equipment.

Oh rental revenue by major customer segment for 2019 as shown in the composition charts on this left side of the slide.

Tractors represented 33% of equipment ratable revenue, followed by industrial customers with 29% other customers represented 20% and infrastructure and government that increased to 18% other total.

National account revenue represented about 42% of the total for the full year it was down slightly compared to 2018.

Local well revenue for the full year increased 6% compared to 2018 and now represents 58% of the total rental revenue.

Growth in new customer accounts continued to be solid throughout the year at those the local and national level, we're continuing to focus on maintaining a solid pipeline for future growth opportunities and all of our targeted end markets as well as growing a portfolio of equipment. Please turn to slide 12.

Aaron Birnbaum: Please turn to slide 12. We added a total of 7 new greenfield locations this year in high-growth urban markets such as Boston, Raleigh, Orlando, the metropolitan New York-New Jersey market, Dallas, and in Hawaii. The map on this slide also shows the growth expectations by state and province over the next 5 years based on forecasts by the American Rental Association. Over the next 5 years, the ARA estimates equipment revenue growth in Nevada and Arizona to lead the nation, with states primarily in the West, Southwest, and Southeast regions to grow in the range of 4% to 6%. Our strategy to focus on the top metropolitan markets will continue to drive our growth. We plan on opening 6 to 10 greenfield locations in 2020. By focusing on improving our scale in major urban markets, we'll continue to improve the profitability of these urban centers.

Aaron Birnbaum: Please turn to slide 12. We added a total of 7 new greenfield locations this year in high-growth urban markets such as Boston, Raleigh, Orlando, the metropolitan New York-New Jersey market, Dallas, and in Hawaii. The map on this slide also shows the growth expectations by state and province over the next 5 years based on forecasts by the American Rental Association. Over the next 5 years, the ARA estimates equipment revenue growth in Nevada and Arizona to lead the nation, with states primarily in the West, Southwest, and Southeast regions to grow in the range of 4% to 6%. Our strategy to focus on the top metropolitan markets will continue to drive our growth. We plan on opening 6 to 10 greenfield locations in 2020. By focusing on improving our scale in major urban markets, we'll continue to improve the profitability of these urban centers.

We added a total of seven new Greenfield locations. This year in high growth urban markets, such as Boston Raleigh, Orlando, The Metropolitan New York, New Jersey market, Dallas and in Hawaii.

The map on the slide also shows the growth expectations by state and products over the next five years based on forecast by the American rental Association.

Over the next five years.

Any estimate equipment revenue growth in Nevada, and Arizona to lead the nation state primarily in the west southwest in southeast regions should grow in the range of 4% to 6%.

Our strategy to focus on the top metropolitan markets will continue to drive our growth. We plan on opening six to 10 Greenfield locations in 20 point.

Focusing on improving our scale and major urban markets will continue to improve the profitability of these urban centers.

Aaron Birnbaum: Industry growth is also expected to benefit from the continued conversion of owned assets to rental in our industry. These secular trends will contribute to steady growth in our end markets as rentals expand beyond traditional rental equipment categories. The strategic initiatives that Larry reviewed earlier were the roadmap we followed to get us to this point in our journey. My top priorities going forward are to continue to focus on fine-tuning our strategies to accelerate our volume and revenue growth, and to continue to focus on operational excellence. Training and development of our people are important components to serving our customers and expanding our markets. We intend to continue to review and enhance every touch point we have with our customers and invest in any areas that need further focus and opportunity.

Aaron Birnbaum: Industry growth is also expected to benefit from the continued conversion of owned assets to rental in our industry. These secular trends will contribute to steady growth in our end markets as rentals expand beyond traditional rental equipment categories. The strategic initiatives that Larry reviewed earlier were the roadmap we followed to get us to this point in our journey. My top priorities going forward are to continue to focus on fine-tuning our strategies to accelerate our volume and revenue growth, and to continue to focus on operational excellence. Training and development of our people are important components to serving our customers and expanding our markets. We intend to continue to review and enhance every touch point we have with our customers and invest in any areas that need further focus and opportunity.

Industry growth is also expected to benefit from the continued conversion of owned assets. So rental in our industry. These secular trends will contribute to steady growth in our end markets as rentals expand beyond traditional rental equipment categories.

The strategic initiatives that Larry reviewed earlier when the roadmap we follow to get US to this point in our journey my top priorities going forward or do you continue to focus on fine tuning our strategies to accelerate our volume and revenue growth and to continue to focus on operational excellence.

Training and development of our people are important components to serving our customers and expanding our markets. We intend to continue to review and enhance every touch point, we have with our customers and invest in any area any further focus an opportunity.

Aaron Birnbaum: Our purpose statement will guide our behavior as we equip our customers and communities to build a brighter future. Now let me turn the call over to Mark Humphrey.

Aaron Birnbaum: Our purpose statement will guide our behavior as we equip our customers and communities to build a brighter future. Now let me turn the call over to Mark Humphrey.

Our purpose statement would guide our behavior as we CWIP, our customers and communities to build a brighter future.

Now, let me turn call over at Marquis already on.

Mark Irion: Thanks, Aaron, and good morning, everyone. If we turn to slide 14 for the details of our Q4 and full year 2019 results. Equipment rental revenue increased 2.1% from $447.7 million to $457 million in Q4 2019. As you heard from Larry and Aaron, all of our Q4 growth was organic and was achieved with limited fleet growth. We focused on rate, managed our CapEx, and are pleased with the results we achieved. We reported net income of $35.1 million or $1.20 per diluted share in this year's Q4, compared with net income of $33.3 million or $1.16 per diluted share in 2018.

Mark Irion: Thanks, Aaron, and good morning, everyone. If we turn to slide 14 for the details of our Q4 and full year 2019 results. Equipment rental revenue increased 2.1% from $447.7 million to $457 million in Q4 2019. As you heard from Larry and Aaron, all of our Q4 growth was organic and was achieved with limited fleet growth. We focused on rate, managed our CapEx, and are pleased with the results we achieved. We reported net income of $35.1 million or $1.20 per diluted share in this year's Q4, compared with net income of $33.3 million or $1.16 per diluted share in 2018.

Thanks, Aaron and good morning, everyone.

Turning to slide 14 for the details about fourth quarter and full year 2019 results.

Equipment rental revenue increased 2.1 proceed for 447.7 million to 457 million in the fourth quarter of 2019.

As it has been Larry and Aaron all of our fourth quarter growth was organic it was achieved with limited fleet growth.

Focused on right Manocept Capex and I'm pleased with results we achieved.

Reported net income of 35.1 billion.

20 per diluted share in this year's fourth quarter compared with net income of 33.3 million or Baltic states to diluted share 2018.

Mark Irion: Adjusted net income in Q4 2019 was $38.9 million or $1.33 per diluted share, compared with $33.4 million or $1.16 per diluted share last year. More details regarding our net income bridge and the non-GAAP reconciliations are included in our appendix. Adjusted EBITDA in Q4 2019 increased 8.1% from $160 million to $214.4 million over the same period in 2018. Adjusted EBITDA margin improved 320 basis points year over year to 39.7% in Q4. Q4 reflected excellent progress in terms of flow-through. We reported EBITDA flow-through of 263.3%, which benefited from actual reductions in SG&A and lower DOE.

Mark Irion: Adjusted net income in Q4 2019 was $38.9 million or $1.33 per diluted share, compared with $33.4 million or $1.16 per diluted share last year. More details regarding our net income bridge and the non-GAAP reconciliations are included in our appendix. Adjusted EBITDA in Q4 2019 increased 8.1% from $160 million to $214.4 million over the same period in 2018. Adjusted EBITDA margin improved 320 basis points year over year to 39.7% in Q4. Q4 reflected excellent progress in terms of flow-through. We reported EBITDA flow-through of 263.3%, which benefited from actual reductions in SG&A and lower DOE.

Adjusted net income in the fourth quarter 2019.

88.9 million or adult 83 per diluted share compared with 53.4 million or dollar 16th the sheer last year.

More details regarding added in Cambridge, and the non get reconciliations are included in European mix.

Adjusted EBITDA in the fourth quarter 2019 increased 8.1 at the state.

60 million to 240.4 million over the same period in 2000 I saved.

Adjusted EBITDA margin improved 340 basis points year over year to 39.2% in fourth quarter.

The fourth quarter reflects the excellent progress in terms of flow through.

We reported rebid the explosive 263.3 policy, which benefited from actual reduction into this tonight and low the elite.

Mark Irion: These are the kind of eye-popping flow-through results that we are all proud of as a team. Our focus on rate growth, CapEx, and self-help cost control initiatives has helped turn a small amount of rental revenue growth into a decent amount of EBITDA growth and a lot of free cash flow. As a result, we grew EBITDA margin by 430 basis points to 46.6% during the Q4 of this year. A record for Hertz. Slide 15 focuses on the changes in total revenues. It includes Q4 and full year results, but as our results have been consistent all year, I will speak primarily to the Q4. Equipment rental revenue grew 2.1% to $457 million in the Q4. Solid improvement in pricing and mix were partially offset by lower volume.

Mark Irion: These are the kind of eye-popping flow-through results that we are all proud of as a team. Our focus on rate growth, CapEx, and self-help cost control initiatives has helped turn a small amount of rental revenue growth into a decent amount of EBITDA growth and a lot of free cash flow. As a result, we grew EBITDA margin by 430 basis points to 46.6% during the Q4 of this year. A record for Hertz. Slide 15 focuses on the changes in total revenues. It includes Q4 and full year results, but as our results have been consistent all year, I will speak primarily to the Q4. Equipment rental revenue grew 2.1% to $457 million in the Q4. Solid improvement in pricing and mix were partially offset by lower volume.

These are the kind of why pumping flow through results that we're both barrel up as a team.

Focus on rate growth Kathy we sell crop cost control initiatives is held to a small amount of rates revenue growth into a decent amount of EBITDA growth and a lot of free cash flow.

As a result, we grew EBITDA margin by 430 basis points to 46.6% during the fourth quarter of this year a record.

Slide 15 focuses on the changes in total revenues and includes Q4 and full year results, but as their results have been consistent all year I'll speak primarily to the fourth quarter.

Equipment rental revenue grew 2.1% to 457 million in the fourth quarter solid improvement in pricing and mix.

Actually offset by lower volumes.

Mark Irion: In Q4, we had a reduction in sales of rental equipment of $5.7 million, excluding currency. Q4 2018 was a big volume quarter for used equipment sales, and we have been selling less in 2019 with an overall focus on our CapEx spend. On slide 16, we see Adjusted EBITDA for Q4 was $214.4 million, an increase of 8.1% or $16 million, compared to $198.4 million in Q4 2018. The bridge starts with higher equipment rental revenue, up $9.4 million over prior year. Now the flow through magic happens. Despite growth in rental revenues, direct operating costs were actually down $5.5 million from Q4 2018.

Mark Irion: In Q4, we had a reduction in sales of rental equipment of $5.7 million, excluding currency. Q4 2018 was a big volume quarter for used equipment sales, and we have been selling less in 2019 with an overall focus on our CapEx spend. On slide 16, we see Adjusted EBITDA for Q4 was $214.4 million, an increase of 8.1% or $16 million, compared to $198.4 million in Q4 2018. The bridge starts with higher equipment rental revenue, up $9.4 million over prior year. Now the flow through magic happens. Despite growth in rental revenues, direct operating costs were actually down $5.5 million from Q4 2018.

Before we hit a reduction of sales of rental equipment of 5.7 billion excluding currency.

Q4, 2000, I think a big volume quarter be used equipment sales, we've been selling late in 2019 within our will focus on that kept experience.

Slide 16, we see adjusted EBITDA for the fourth quarter was 214.4 million an increase of 8.1% was 16 million compared to 198.4 million in the fourth quarter 2018.

The bridge starts with higher equipment rental revenue up 9.4 million over prior year and now closely matches efforts despite growth in rental revenues direct operating costs were actually down 5.5 billion from the fourth quarter 2000, I'd say.

Mark Irion: The team is particularly proud of these results as we kept an eye on expenses with improved operating efficiencies, primarily from delivery and freight. These reductions were partially offset in Q4 by increased facility costs, as well as increased personnel and personnel-related expenses. Selling, general, and administrative costs were also down year over year, primarily due to the reduction of bad debt and professional fees. As we've discussed, EBITDA measures the contribution of our core rental business without the impact of sales of equipment, parts, and supplies. We believe EBITDA provides a better comparison with our industry peers as it excludes the impact of varying depreciation policies.

Mark Irion: The team is particularly proud of these results as we kept an eye on expenses with improved operating efficiencies, primarily from delivery and freight. These reductions were partially offset in Q4 by increased facility costs, as well as increased personnel and personnel-related expenses. Selling, general, and administrative costs were also down year over year, primarily due to the reduction of bad debt and professional fees. As we've discussed, EBITDA measures the contribution of our core rental business without the impact of sales of equipment, parts, and supplies. We believe EBITDA provides a better comparison with our industry peers as it excludes the impact of varying depreciation policies.

The team is particularly proud of these results as we get Tonight expenses with improved operating efficiencies primarily from delivery of price.

These reductions were partially offset in the fourth quarter by increase facility costs as well as increased personnel and personnel related expenses selling general and administrative costs were also down year over year, primarily due to the reduction of bad debt and professional fees.

As we've discussed read the damage as the contribution of their core referral business without the impact of sales of equipment passive supplies.

We believe EBITDA provides data comparison with their industry peers is it excludes the impact of very age appreciation policies.

Mark Irion: The combination of improved rental revenues and reduction in our cash operating expenses led to off-the-chart EBITDA flow through of 263.3% and drove a 430 basis point improvement in EBITDA margins to 46.6%. Overall, an excellent quarter and an excellent year for healthy revenue growth and self-help measures around cost control. Our fiscal year 2019 margin flow through is over 169%. Our EBITDA margins improved by 310 basis points. Thank you to all of our Hertz team members for your contributions to these results. Turning to slide 17. On a cash basis, net fleet CapEx for the year was $414.2 million, compared with $499.1 million in the prior year.

Mark Irion: The combination of improved rental revenues and reduction in our cash operating expenses led to off-the-chart EBITDA flow through of 263.3% and drove a 430 basis point improvement in EBITDA margins to 46.6%. Overall, an excellent quarter and an excellent year for healthy revenue growth and self-help measures around cost control. Our fiscal year 2019 margin flow through is over 169%. Our EBITDA margins improved by 310 basis points. Thank you to all of our Hertz team members for your contributions to these results. Turning to slide 17. On a cash basis, net fleet CapEx for the year was $414.2 million, compared with $499.1 million in the prior year.

The combination of improve rental revenues and reduction in our cash operating expenses is off the Chuck Rubin both for two vendors.

Frequency it drove a 430 basis point improvement of EBITDA advisors to 46.6 specific.

Overall, it makes good quarter in an excellent year to healthy revenue growth in self help measures around cost control.

Fiscal year 2019 margin flow throughs over 160 life is it never EBITDA margins improved by 310 basis points. Thank you toward out his team members Steve contributions to these results.

Turning to slide 17, all the cash basis net fleet Capex for the year was 414.2 million compared with 499.1 million in the prior year.

Mark Irion: Non-fleet capital expenditures for the full year were also down by $56.9 million from $77.6 million in 2018. For Q4 2019, fleet expenditures at OEC were $63 million, with fleet disposals of $188 million, generating about 38% of proceeds, down from 42% of proceeds in 2018. We sold approximately 50% of our fleet through auction in Q4, and auction results were down a bit from prior year, probably more due to the condition of the fleet rather than any real weakness in the market. The average age of our disposals in the fourth quarter was 82 months. We reduced the average age of our fleet to approximately 45 months at the end of Q4 2019 from 46 months in the comparable period last year.

Mark Irion: Non-fleet capital expenditures for the full year were also down by $56.9 million from $77.6 million in 2018. For Q4 2019, fleet expenditures at OEC were $63 million, with fleet disposals of $188 million, generating about 38% of proceeds, down from 42% of proceeds in 2018. We sold approximately 50% of our fleet through auction in Q4, and auction results were down a bit from prior year, probably more due to the condition of the fleet rather than any real weakness in the market. The average age of our disposals in the fourth quarter was 82 months. We reduced the average age of our fleet to approximately 45 months at the end of Q4 2019 from 46 months in the comparable period last year.

Capital expenditures for the full year bolster down by 56.9 million from 77.6 million in 2000 Medicaid.

For the fourth quarter of 2019 feed expenditures that we see the 63 million with big disposals of 188 million generating about 38 to see that proceeds down from 42% of course seats in 2018.

So approximately 50% update truck said Q4, and I'll turn results were down a bit from prior year, probably more due to the condition of the fleet rather than they are weakness in the market.

You average age of out disposals in the fourth quarter was 82 levels.

We reduced the average age of athlete to approximately 45 months at the end of Q4 2019 for 46 months in the computer comparable period last year.

The quarterly will break out of this information along with the rolling balance that total fleet is also in the appendix.

Mark Irion: A quarterly roll breakout of this information, along with the rolling balance of our total fleet, is also in the appendix. On slide 18, for the year ended December 31, 2019, free cash flow was $172 million, compared with -$7.9 million free cash flow in 2018. This represents a substantial improvement in our free cash flow generation and consolidates our strategic initiatives in 2019, focused around rate, expense control, and disciplined capital expenditures. Net leverage decreased to 2.8 times, compared with 3.1 times in the comparable period, and was solidly within our targeted range of 2.5 to 3.5 times.

Mark Irion: A quarterly roll breakout of this information, along with the rolling balance of our total fleet, is also in the appendix. On slide 18, for the year ended December 31, 2019, free cash flow was $172 million, compared with -$7.9 million free cash flow in 2018. This represents a substantial improvement in our free cash flow generation and consolidates our strategic initiatives in 2019, focused around rate, expense control, and disciplined capital expenditures. Net leverage decreased to 2.8 times, compared with 3.1 times in the comparable period, and was solidly within our targeted range of 2.5 to 3.5 times.

On slide 18 for the year ended December 31, 2019 free cash flow was 153 million compared with negative free cash flow up 2.9 million in 2018.

Sure. There is it's a substantial improvement in our free cash flow generation. It consolidates a strategic initiatives in 2000 lighting focused around right expense control disciplined capital expenditures.

Yes, Edwards decreased to 2.8%.

3.8 times compared to 3.1 times in the comparable period.

Solidly within our targeted range, it sort of half to three and half times.

Total debt was 2.1 billion as of December 31, 2019 about the same as the prior year low near term maturities as a result, the refinancing notes and the ABL credit facility and expected refinancing.

Mark Irion: Total debt was $2.1 billion as of 31 December 2019, about the same as the prior year, with no near-term maturities as a result of the refinancing of the notes in the ABL credit facility, and expected refinancing of the ABL facility. We had ample liquidity of over $1.1 billion as of 31 December 2019. On slide 19, we look at the industry outlook, and we see certain economic and industry metrics have begun to report more positive signs regarding the economy. The Architecture Billings Index, which is thought to be an indicator of construction activity nine to 12 months out, rose to 52.2 in January, the fifth straight positive month. US industrial spending forecasts for 2020 estimate growth of 1.7% over 2019.

Mark Irion: Total debt was $2.1 billion as of 31 December 2019, about the same as the prior year, with no near-term maturities as a result of the refinancing of the notes in the ABL credit facility, and expected refinancing of the ABL facility. We had ample liquidity of over $1.1 billion as of 31 December 2019. On slide 19, we look at the industry outlook, and we see certain economic and industry metrics have begun to report more positive signs regarding the economy. The Architecture Billings Index, which is thought to be an indicator of construction activity nine to 12 months out, rose to 52.2 in January, the fifth straight positive month. US industrial spending forecasts for 2020 estimate growth of 1.7% over 2019.

Facility.

We had ample liquidity of over $1.1 billion as of December 31, 2019.

Slide 19, we look at the industry outlook.

The certainly economic and industry metrics have begun to report more positive signs regarding the economy.

The architecture Billings index, which is 15 indicator of construction activity nine to 12 months out rose to 53.2 in January.

Straight positive.

You, which industrial spending forecast between 20 estimate growth of 1.0 could sit over 2000 white sheet.

Mark Irion: Our conversations with industrial customers and contractors in our markets indicate confidence for continued growth and spending in the short and medium-term horizon. US non-residential construction spending estimates for 2020 suggest a bit of a slowdown with a decline of 3.3%. The absolute dollar value of $289 billion in spending is substantially above 2016 and is certainly sufficient to sustain favorable rental demand. Longer term, the North American ARA forecast for industry equipment rental revenue growth remains solid, with the compound annual growth projected at 3.6% through 2023. We look at our end markets in 2020 as being in a slow but steady growth phase, similar to what we've been experiencing for the last five to six years.

Mark Irion: Our conversations with industrial customers and contractors in our markets indicate confidence for continued growth and spending in the short and medium-term horizon. US non-residential construction spending estimates for 2020 suggest a bit of a slowdown with a decline of 3.3%. The absolute dollar value of $289 billion in spending is substantially above 2016 and is certainly sufficient to sustain favorable rental demand. Longer term, the North American ARA forecast for industry equipment rental revenue growth remains solid, with the compound annual growth projected at 3.6% through 2023. We look at our end markets in 2020 as being in a slow but steady growth phase, similar to what we've been experiencing for the last five to six years.

Conversations with industrial customers at contractors and unlock that indicate cope with us for continued growth expanding in the short and medium term horizon.

You asked nonresidential construction spending estimates between 20 to just a bit of a slowdown would have declined 3.3%.

Yes lose dollar value of 289 billion, that's being substantially above 2016, and astutely sufficient to sustain favorable rates will come on.

Longer term.

American IRA forecast for industry equipment rental revenue growth remains solid with the compound annual growth projected at 3.6% through 2020 Threerd.

We look at every markets in 2020 as being at a slow but steady growth plays similar to what we've been experiencing for the last five to six years, we believe that slow growth in an overhang of economic gain uncertainty benefits the rental industry as our customers hesitates commit capital and raise equipment to satisfy.

Mark Irion: We believe that slow growth and an overhang of economic uncertainty benefits the rental industry as our customers hesitate to commit their own capital and rent equipment to satisfy their needs. On slide 20, we have our guidance for 2020. Based on our expectations for steady demand in our key markets for 2020, we are looking to build on our 2019 success with solid organic growth in our rental revenues and a continued focus to tightly manage our operating expenses and CapEx. We're initiating our guidance range for adjusted EBITDA for 2020.

Mark Irion: We believe that slow growth and an overhang of economic uncertainty benefits the rental industry as our customers hesitate to commit their own capital and rent equipment to satisfy their needs. On slide 20, we have our guidance for 2020. Based on our expectations for steady demand in our key markets for 2020, we are looking to build on our 2019 success with solid organic growth in our rental revenues and a continued focus to tightly manage our operating expenses and CapEx. We're initiating our guidance range for adjusted EBITDA for 2020.

By the needs.

On slide 20, we had our guidance for 2020.

Based on expectations to steady demand in key markets between 20, we're looking to build on F 2019 succeeds with solid organic growth in areas, where the news and the continued focus to tightly manage our operating expenses and capx.

Initiating guidance range very adjusted EBITDA between 20.

Mark Irion: Our guidance range is $760 to $790 million of EBITDA, or an increase of 3% to 7% compared to 2019. Our guidance range of net fleet capital expenditures is $410 million to $450 million and assumes moderate year-over-year fleet growth. Disciplined CapEx spending, along with the expectation for improved EBITDA, should contribute to strong free cash flow for the year. Our overall strategy is expected to continue to provide ample liquidity and the financial flexibility to fund our strategic growth, to improve our operating margins, to serve our customers, and create value for our shareholders. Now I'll pass the call back to Larry.

Mark Irion: Our guidance range is $760 to $790 million of EBITDA, or an increase of 3% to 7% compared to 2019. Our guidance range of net fleet capital expenditures is $410 million to $450 million and assumes moderate year-over-year fleet growth. Disciplined CapEx spending, along with the expectation for improved EBITDA, should contribute to strong free cash flow for the year. Our overall strategy is expected to continue to provide ample liquidity and the financial flexibility to fund our strategic growth, to improve our operating margins, to serve our customers, and create value for our shareholders. Now I'll pass the call back to Larry.

Guidance range of 760, 790 million of EBITDA or an increase of 3% to 7% compared to 2000, let's see.

Hi, guys range of net capital expenditures is 410 million to 450 million initiatives moderate year over year fleet growth.

Disciplined capital.

Capital spending along with the expectation for improved EBIT, they should contribute to strong free cash flow through the year.

Overall strategy is expected to continue to provide ample liquidity and financial fix ability to fund strategic growth.

Well operating margins, so soon enough customers and create value for shareholders.

Now I'll pass the Cobank Larry.

Larry Silber: Thank you, Mark. Before we go to Q&A, I'd like to summarize where we are today. Our strategic initiatives have continued to drive growth in rental revenues and improve dollar utilization. We improved adjusted EBITDA margin by 320 basis points to 39.7%. We increased dollar utilization 80 basis points to 40.5%. We improved year-to-date free cash flow from -$7.9 million in 2018 to +$172 million in 2019. Our operating initiatives will continue to contribute to strong REBITDA flow-through for the full year of 2019. As we start the new year, I wanna express my thanks and congratulations to the entire Hertz team for their contribution in this record year for us.

Larry Silber: Thank you, Mark. Before we go to Q&A, I'd like to summarize where we are today. Our strategic initiatives have continued to drive growth in rental revenues and improve dollar utilization. We improved adjusted EBITDA margin by 320 basis points to 39.7%. We increased dollar utilization 80 basis points to 40.5%. We improved year-to-date free cash flow from -$7.9 million in 2018 to +$172 million in 2019. Our operating initiatives will continue to contribute to strong REBITDA flow-through for the full year of 2019. As we start the new year, I wanna express my thanks and congratulations to the entire Hertz team for their contribution in this record year for us.

Thank you Mark before I go to review and I'd like to summarize where we are today.

Our strategic initiatives have continued to drive growth and rental revenues and improved dollar utilization, we improved adjusted EBITDA margin by 320 basis points to 39.7%.

We increased our utilization 80 basis points of 40.5%, we improve your day free cash flow from negative $7.9 million in 2018 to a positive $172 million in 2019.

Operating initiatives will continue to contribute to strong rebid flow through for the full year 2019.

Let's start the new year I want to express my thanks, and congratulations to the entire hurting.

Contribution in this record year for us.

Larry Silber: We're committed to the strategy we laid out four years ago and plan to achieve our stated goals through solid execution to improve value for our shareholders, customers, and employees. Now to your questions. Operator, please open the lines.

Larry Silber: We're committed to the strategy we laid out four years ago and plan to achieve our stated goals through solid execution to improve value for our shareholders, customers, and employees. Now to your questions. Operator, please open the lines.

We're committed to the strategy, we laid out four years ago and plan to achieve our stated goal through solid execution to improve value for our shareholders customers and employees and now your question. So operator, please open the loans.

Thank you if you would like to ask a question. Please press star followed by the digit one if you are using the speakerphone. Please make sure. Your mute function is turned off televise signal to reach our equipment. Once again star one to ask a question.

Operator 2: Thank you. If you would like to ask a question, please press star followed by the digit one. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one to ask a question. Our first question today will come from Jerry Revich with Goldman Sachs.

Operator: Thank you. If you would like to ask a question, please press star followed by the digit one. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one to ask a question. Our first question today will come from Jerry Revich with Goldman Sachs.

And our first question today will come from Jerry Davis with Goldman Sachs.

Yes, hi, good morning, everyone.

Jerry Revich: Yes, hi, good morning, everyone.

Jerry Revich: Yes, hi, good morning, everyone.

Good morning.

Larry Silber: Good morning.

Larry Silber: Good morning.

Jerry Revich: Can you talk about the planned cadence of CapEx over the course of 2020? You had mentioned that you would have liked to have seen fleet on rent be stronger exiting the year, and I'm wondering, as you lay out the CapEx outlook, how back half-loaded is it? How much flexibility do you have where to move below the low end of the range if you so decide?

Jerry Revich: Can you talk about the planned cadence of CapEx over the course of 2020? You had mentioned that you would have liked to have seen fleet on rent be stronger exiting the year, and I'm wondering, as you lay out the CapEx outlook, how back half-loaded is it? How much flexibility do you have where to move below the low end of the range if you so decide?

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Plan cadence of Capex over the course of 20, you had mentioned that you would have like because I've seen fleet on rent be stronger exiting the year and I'm wondering as you lay out the capex outlook held back half loaded is or how much flexibility do you have.

Below the low end of the range here if you some decides.

Yes, good morning Gerry.

Mark Irion: Yeah. Good morning, Jerry. I mean, the fleet CapEx didn't have any real connection to our volume in Q4. That typically comes in early in the year, so it's heavily front loaded into Q1 and Q2. That's just very typical and that's the way it'll happen again this year. We were conservative with our CapEx last year, but I think that's where the comment around sort of volume was. We're looking for volume growth out of time utilization and rate. We certainly got the rate, but Q4 sort of didn't really provide the opportunity for timing that we expected.

Mark Irion: Yeah. Good morning, Jerry. I mean, the fleet CapEx didn't have any real connection to our volume in Q4. That typically comes in early in the year, so it's heavily front loaded into Q1 and Q2. That's just very typical and that's the way it'll happen again this year. We were conservative with our CapEx last year, but I think that's where the comment around sort of volume was. We're looking for volume growth out of time utilization and rate. We certainly got the rate, but Q4 sort of didn't really provide the opportunity for timing that we expected.

The fleet Capex wasn't doesn't have any real connection to our volume and Q4 that typically comes and early in the year. So it's heavily front loaded into Q1 in Q2.

It's just very very typical in Venezuela has again this year.

We will conservative with FX last year, I think which as we have if the comment around sort of volume also we're looking for volume growth at a time utilization and right.

And we certainly both the right.

For Q4 so.

But the opportunity that's why we that we expected.

Yeah and.

Jerry Revich: You know, obviously two levers of timing. One is the demand piece, but the other is, you know, how much capacity you folks choose to deliver into the market. Just given the softer utilization in Q4, should we think of a lighter CapEx in Q1 versus normal seasonality or how do you think about the pace of CapEx as it's going to be rolled out?

Jerry Revich: You know, obviously two levers of timing. One is the demand piece, but the other is, you know, how much capacity you folks choose to deliver into the market. Just given the softer utilization in Q4, should we think of a lighter CapEx in Q1 versus normal seasonality or how do you think about the pace of CapEx as it's going to be rolled out?

I see two levers to Tom you want as the demand piece, but the other is.

Much capacity you folks it used to deliver into market interest given no softer tie news.

In in Fourq, you should we think of lighter capex in the first quarter versus normal seasonality or how do you think about.

The the pace of Capex is going to be rolled out.

Mark Irion: No, so as far as we're concerned, I mean, we've been very conservative with our CapEx in 2019. We'll probably be looking for a little bit more fleet growth in 2020. The demand is solid out there. There's no real shock that we're addressing. The demand in Q1 that we've seen so far is typical of what we'd expect. We're going into 2020 pretty much with the same cadence and the same expectations that we sort of ramped up in 2019 with.

Mark Irion: No, so as far as we're concerned, I mean, we've been very conservative with our CapEx in 2019. We'll probably be looking for a little bit more fleet growth in 2020. The demand is solid out there. There's no real shock that we're addressing. The demand in Q1 that we've seen so far is typical of what we'd expect. We're going into 2020 pretty much with the same cadence and the same expectations that we sort of ramped up in 2019 with.

So as far as we're considering I mean, we've been very conservative with MK from 19.

We'll probably be looking for a little bit more fleet growth in 2020.

The demands as solid FBN Theres no real Schawk, we're addressing so we will and the demand in Q1 that we've seen so far as is typical of what we've been asked so we're going into 2020 out pretty much with design.

Cadence for the sake, the patients that we sort of ramp up into 2019.

Okay, and lastly can you talk about.

Jerry Revich: Okay. Lastly, can you talk about what level of improvement in dollar utilization you're expecting with your 2020 outlook? It looks like at the midpoint of the range you're baking in, you know, modest improvement in dollar utilization, at least, that's how the math looks. Can you just comment on if that's right and if you expect a bigger contribution from price and mix versus utilization? That'd be helpful.

Jerry Revich: Okay. Lastly, can you talk about what level of improvement in dollar utilization you're expecting with your 2020 outlook? It looks like at the midpoint of the range you're baking in, you know, modest improvement in dollar utilization, at least, that's how the math looks. Can you just comment on if that's right and if you expect a bigger contribution from price and mix versus utilization? That'd be helpful.

What level of improvement in dollars.

Illustration, you Youre expecting with your 20 outlook it looks like at the midpoint of the range you're baking in.

Modest improvement in dollar you cut loose good that's how the map looks can you just comment on if that's right.

We expect that bigger contribution from price and mix versus utilization that'd be helpful.

Guidance has been pretty consistent in terms of dollars. It. So we're looking for 100 to sort of 200 basis points of improvement year over year for the sort of next couple of years. That's the goal that we sit for ourselves and we certainly.

Mark Irion: I mean, our guidance has been pretty consistent in terms of dollar UTE, so we're looking for 100 to sort of 200 basis points of improvement year over year for the sort of next couple of years. That's the goal that we set for ourselves, and we certainly, you know, went a long way to hitting that goal in 2019 and expect to do the same in 2020. We're probably not gonna be able to lean on rate as hard in 2020 as we did in 2019. We're not gonna consistently be able to beat the market by four times, but we will look to consistently beat the market. We've got, you know, success here, and we do look to continue to push on that lever.

Mark Irion: I mean, our guidance has been pretty consistent in terms of dollar UTE, so we're looking for 100 to sort of 200 basis points of improvement year over year for the sort of next couple of years. That's the goal that we set for ourselves, and we certainly, you know, went a long way to hitting that goal in 2019 and expect to do the same in 2020. We're probably not gonna be able to lean on rate as hard in 2020 as we did in 2019. We're not gonna consistently be able to beat the market by four times, but we will look to consistently beat the market. We've got, you know, success here, and we do look to continue to push on that lever.

Meanwhile, Whiting hitting that goal in 2019 and expect to the segment 2020.

We're probably not going to be able to lean on right as hard as 2020 years, we did and and 19 were not going to consistently beat the market by a full time.

We'll look to consistently beat the market. We've got succeeds here, we do look to continue to push on the liver and we will continue to sort of local the time utilization improvement will so there could trigger today. So thats the best that we might be missed in 2019 that we're going to focus real hot it goes in 20 to 40.

Mark Irion: We will continue to sort of look for time utilization improvement also to contribute to that. That's the bit that we maybe missed in 2019 that we're gonna focus real hard and go get in 2020.

Mark Irion: We will continue to sort of look for time utilization improvement also to contribute to that. That's the bit that we maybe missed in 2019 that we're gonna focus real hard and go get in 2020.

Thank you.

Jerry Revich: Thank you.

Jerry Revich: Thank you.

Thank you Sir your next week.

Larry Silber: Thank you. See you next week.

Larry Silber: Thank you. See you next week.

Yes.

Operator, you can go onto the next question, Yes, we'll hear from Stephen Ramsey Thompson Research group.

Mark Irion: Operator, you can go on to the next question.

Elizabeth Higashi: Operator, you can go on to the next question.

Operator 2: Yes. We'll hear from Steven Ramsey with Thompson Research Group.

Operator: Yes. We'll hear from Steven Ramsey with Thompson Research Group.

Hi, Good morning, Brian Biossance there Steven Thanks for taking my questions I want to ask wanted at the end markets I ask you have some good commentary in their prepared remarks.

Brian Byers: Hey, good morning. This is actually Brian Byers on for Steven. Thank you for taking my questions. I wanted to ask one about the end markets. I guess you gave some good commentary in the prepared remarks. It seemed like slow and steady, kind of similar to the last few years. Could you maybe compare how you feel now versus 12 months ago for your outlook, and if things are the same, worse, a little better? Just really trying to get a sense of how the end markets have evolved and kind of feedback you're getting from the field on that.

Brian Byers: Hey, good morning. This is actually Brian Byers on for Steven. Thank you for taking my questions. I wanted to ask one about the end markets. I guess you gave some good commentary in the prepared remarks. It seemed like slow and steady, kind of similar to the last few years. Could you maybe compare how you feel now versus 12 months ago for your outlook, and if things are the same, worse, a little better? Just really trying to get a sense of how the end markets have evolved and kind of feedback you're getting from the field on that.

Like slow and steady kind of similar to last few years.

That's because you maybe compare how you feel now versus 12 months ago for your outlook and if things are the same worse a little better.

Trying to get sent that have end markets have evolved and feedback you're getting from the field on on that.

Larry Silber: Yeah. Good morning, Brian. This is Larry Silber. Yeah, look, we're pretty optimistic about the markets. We believe that we're gonna have another solid year. The markets that we participate are reporting excellent type of project activity and expectations as we flow into what is the traditional construction season coming up here. We think that personally and as a company, we're probably a bit more positive today than we were a year ago. There was a lot of anxiety flowing around the beginning of 2019 with all the happenings in the government and some instability and some unknowns. All of that sort of been cleared up. We're in a presidential election year.

Larry Silber: Yeah. Good morning, Brian. This is Larry Silber. Yeah, look, we're pretty optimistic about the markets. We believe that we're gonna have another solid year. The markets that we participate are reporting excellent type of project activity and expectations as we flow into what is the traditional construction season coming up here. We think that personally and as a company, we're probably a bit more positive today than we were a year ago. There was a lot of anxiety flowing around the beginning of 2019 with all the happenings in the government and some instability and some unknowns. All of that sort of been cleared up. We're in a presidential election year.

Yeah. Good morning, Brian This is Larry Silber, Yeah look where we're pretty optimistic about the markets. We believe that we're going to have another solid year. The markets are we participate.

Our reporting.

Excellent type of project activity and expectations as we know flow into what is the traditional construction season.

Coming up here, we think that.

Personally.

As a company, we're probably a bit more positive today than we were a year ago that was a lot of.

So anxiety flowing around the beginning of 2019 will evolve arcanum's.

On the government and.

It's a month stability and some among all that sort of been cleared up or other presidential election year, we expect with somebody a fair amount of federal spending and not large urban markets on infrastructure work, which is sort of our sweet spot and where we expect that will have a good opportunity to improve our volume so.

Larry Silber: We expect there to be a fair amount of federal spending in the large urban markets on infrastructure work, which is sort of our sweet spot and where we expect that we'll have a good opportunity to improve our volumes. We're as positive, if not more positive, going into 2020 than we were 2019.

Larry Silber: We expect there to be a fair amount of federal spending in the large urban markets on infrastructure work, which is sort of our sweet spot and where we expect that we'll have a good opportunity to improve our volumes. We're as positive, if not more positive, going into 2020 than we were 2019.

So we're we're we're as positive if not more positive going into 20 than we were 19.

That's good.

Brian Byers: That's good to hear. Just a second follow-up. In some of our channel checks, we've heard some people mention certain markets are either oversupplied or getting to that kind of oversupplied status in fleet. I just wanna see, are you guys seeing any of that in any markets anywhere? Just trying to reconcile how that goes with, you know, the industry just trying to generally maintain positive rates, and if it's more challenging in certain markets if they are seeing that oversupplied.

Brian Byers: That's good to hear. Just a second follow-up. In some of our channel checks, we've heard some people mention certain markets are either oversupplied or getting to that kind of oversupplied status in fleet. I just wanna see, are you guys seeing any of that in any markets anywhere? Just trying to reconcile how that goes with, you know, the industry just trying to generally maintain positive rates, and if it's more challenging in certain markets if they are seeing that oversupplied.

Then just a second follow up.

Some of our channel checks you've heard some people mentioned in certain markets are oversupplied are getting to that kind of oversupplied status in fleet I was going to see are you guys see in any of that in any markets anywhere and just trying to.

That goes with it if industry to try to generally maintained positive rates and it's more challenging in certain markets. If they are seeing that oversupplied.

Yeah, I wouldn't say the thinking oversupplied in any market.

Mark Irion: Yeah. I wouldn't say that we're seeing oversupply in any market. I think maybe by the end of 2019, supply had started to catch up, or supply growth had started to catch up to demand growth. I think we're starting to see adjustments in the CapEx sort of growth cadence from some other players in the industry, and we're happy to see that, and we suspect that the industry is gonna be able to adjust to the changing conditions. There's still decent demand. There's plenty of fleet out there. As always, it's a competitive environment, but you know, we don't see any real dramatic signs of oversupply.

Mark Irion: Yeah. I wouldn't say that we're seeing oversupply in any market. I think maybe by the end of 2019, supply had started to catch up, or supply growth had started to catch up to demand growth. I think we're starting to see adjustments in the CapEx sort of growth cadence from some other players in the industry, and we're happy to see that, and we suspect that the industry is gonna be able to adjust to the changing conditions. There's still decent demand. There's plenty of fleet out there. As always, it's a competitive environment, but you know, we don't see any real dramatic signs of oversupply.

I think maybe by the end of life seeing supply has fallen catch up what supply growth had started to catch up to demand growth.

I think we're starting to see adjustments in the case sort of growth tightens firms from some other plays in the industry and we're happy to see that weve spaces industry is going to be able to adjust.

To the changing conditions, but there's still.

Each of them on.

As previously out there is always a computer bargains, but we don't see any real competitive volumes of oversupply.

Understood. Thank you.

Brian Byers: All right, Sid. Thank you.

Brian Byers: All right, Sid. Thank you.

And next I move to Brian Sponheimer with Capella funds.

Operator 2: Next, I move to Brian Sponheimer with Gabelli Funds.

Operator: Next, I move to Brian Sponheimer with Gabelli Funds.

Hi, good morning, and I'd, rather and good morning.

Brian Sponheimer: Hi, good morning, everyone.

Brian Sponheimer: Hi, good morning, everyone.

Larry Silber: Hi, Brian. Good morning.

Larry Silber: Hi, Brian. Good morning.

Greetings there.

Brian Sponheimer: Greetings to Aaron.

Brian Sponheimer: Greetings to Aaron.

I agree with you guys keep doing a tick.

Larry Silber: Good day.

Larry Silber: Good day.

Brian Byers: You guys keep doing just a great job driving margin expansion here. Given the revenue environment, is there anything on the SG&A or DOE side that kind of sticks out as an area where you can improve even further?

Brian Sponheimer: You guys keep doing just a great job driving margin expansion here. Given the revenue environment, is there anything on the SG&A or DOE side that kind of sticks out as an area where you can improve even further?

Great job driving.

Margin expansion here.

Given the revenue environment is there anything on on the DNA or deal, we signed that kind of mix out as an area, where you can get through even further.

Yeah.

Yeah, Hi, Brian.

Mark Irion: Yeah. Hi, Brian. I mean, we're really happy with the results we've got in 2019. Obviously, they're pretty dramatic and something that we're not gonna be able to sort of maintain this sort of momentum on for forever. We will be back, I suspect, by 2020 to a slow growth in OEC and flattish SG&A. Delivery and freight is an area where we got some big cost savings in Q4 and will continue to benefit in 2020, just as we focus on the efficiency of our logistics and just continually improving some of our results there. There are opportunities for continued efficiency, but you know, it's not gonna be as dramatic as what you see in Q4.

Mark Irion: Yeah. Hi, Brian. I mean, we're really happy with the results we've got in 2019. Obviously, they're pretty dramatic and something that we're not gonna be able to sort of maintain this sort of momentum on for forever. We will be back, I suspect, by 2020 to a slow growth in OEC and flattish SG&A. Delivery and freight is an area where we got some big cost savings in Q4 and will continue to benefit in 2020, just as we focus on the efficiency of our logistics and just continually improving some of our results there. There are opportunities for continued efficiency, but you know, it's not gonna be as dramatic as what you see in Q4.

I mean were really happy with results we've got to 2019.

Obviously, the up pretty dramatic and something that we're not going to be able to sort of made payments. So my mates evolving for forever. So we will be back I suspect between 22 or a slow growth and deal we and flattish is today.

Deliberate bright as an area, where we got some big cost savings in Q4, and we'll continue to benefit in 2020 does as we focus on the efficiency of their logistics and just continually improving.

Some of our results there. So there are opportunities for continued efficiency, but.

But.

You know, it's not going to be as dramatic as what you say Q4.

Brian Sponheimer: Got it. Larry, if you're thinking about preparing your company for any sort of material correction in the market, can you walk through maybe the roadmap of first steps to make sure that you don't get caught in an area where you're exposed?

Brian Sponheimer: Got it. Larry, if you're thinking about preparing your company for any sort of material correction in the market, can you walk through maybe the roadmap of first steps to make sure that you don't get caught in an area where you're exposed?

Got it.

And there is thinking about.

Pairing your company.

Or.

Any sort of material correction in the market.

Okay can you walk through or maybe the load map of.

For steps to make sure that you don't get caught.

In an area, where we're supposed.

Yeah look we're well first of all we don't expect that to happen you know.

Larry Silber: Yeah. Look, well, first of all, you know, we don't expect that to happen, you know, except if there's an unforeseen, you know, issue that comes up and. If it did, look, initially, we would cut off CapEx. We are not sort of committed beyond a 60-day period out in terms of our purchase agreements with all of our vendors. We would shut the pipeline off on new materials coming in. We would obviously look to de-fleet where it was appropriate, where we saw those, you know, those actions happening relative to reduced demand, and we'll de-fleet appropriately in a, you know, an expeditious manner, that'll, you know, raise cash for us.

Larry Silber: Yeah. Look, well, first of all, you know, we don't expect that to happen, you know, except if there's an unforeseen, you know, issue that comes up and. If it did, look, initially, we would cut off CapEx. We are not sort of committed beyond a 60-day period out in terms of our purchase agreements with all of our vendors. We would shut the pipeline off on new materials coming in. We would obviously look to de-fleet where it was appropriate, where we saw those, you know, those actions happening relative to reduced demand, and we'll de-fleet appropriately in a, you know, an expeditious manner, that'll, you know, raise cash for us.

No scepticism on porcelain.

Additionally that comes up and.

Good luck initially we were what we would cut off Capex we are not.

Committed the.

60 day period out in terms of our our purchase of remnants when all of our vendors. So we weren't shut the pipeline loss on new materials coming in and then we would obviously look too deeply.

Well was appropriate where we saw knows.

Those actions happening relative to.

Reduce the man.

And we'll deeply appropriately.

When expeditious manner.

That will raise cash for us.

Larry Silber: We'll look to have, you know, adjustments in our DOE and SG&A that would accordingly match that. Look, the formula is pretty easy in this industry. In fact, you know, if there were a negative environment, we generate a lot of cash in a negative environment.

And then when looked at.

Larry Silber: We'll look to have, you know, adjustments in our DOE and SG&A that would accordingly match that. Look, the formula is pretty easy in this industry. In fact, you know, if there were a negative environment, we generate a lot of cash in a negative environment.

No adjustments in our in R&D Ali and best DNA that would accordingly match that so what's the formula is pretty easy in this industry. In fact, you know if there were a negative environment, we generate a lot of cash.

I would have been bottom.

Well the execution is certainly a impressive best as a best of luck for a great 2020.

Brian Sponheimer: Well, the execution is certainly impressive. Best of luck for a great 2020.

Brian Sponheimer: Well, the execution is certainly impressive. Best of luck for a great 2020.

Thanks.

Larry Silber: Thanks, Brian.

Brian Sponheimer: Thanks, Brian.

Operator really reminder.

Operator 2: As a reminder, please press star one to ask your question. Next, we'll hear from Seth Weber with RBC Capital Markets.

Operator: As a reminder, please press star one to ask your question. Next, we'll hear from Seth Weber with RBC Capital Markets.

As a reminder, please press star one to ask your question.

Next we'll hear from Seth Weber with RBC capital markets.

Hi, Good morning, this is Brian and on for stuff.

[Analyst] (RBC Capital Markets): Hi, good morning. This is Brendan on for Seth. As we look at your fleet composition, is there any notable strength or weaknesses you're seeing, by equipment type that you feel is worth calling out?

[Analyst] (RBC Capital Markets): Hi, good morning. This is Brendan on for Seth. As we look at your fleet composition, is there any notable strength or weaknesses you're seeing, by equipment type that you feel is worth calling out?

As we look at your fleet composition is there any notable strength or weakness is you're seeing buy equipment types that you feel it's worth calling out.

No I think where we're fairly strong across all of our equipment categories. We've done an excellent job.

Larry Silber: Look, no, you know, I think we're fairly strong across all of our equipment categories. We've done an excellent job, you know, over the last four and a half years of shedding the fleet that existed when we came into the company and did the spin back in mid-2016. We're pretty much, you know, beyond any of that remaining fleet. In fact, you know, we had a great deal of that exit in Q4 of 2019. That was, you know, sort of 82-month-old type fleet that had been procured prior to the current leadership team coming in place. We feel our fleet is pretty strong across the board. We continue to look at the markets in which we have fleet. Do we have the right fleet in the right markets?

Larry Silber: Look, no, you know, I think we're fairly strong across all of our equipment categories. We've done an excellent job, you know, over the last four and a half years of shedding the fleet that existed when we came into the company and did the spin back in mid-2016. We're pretty much, you know, beyond any of that remaining fleet. In fact, you know, we had a great deal of that exit in Q4 of 2019. That was, you know, sort of 82-month-old type fleet that had been procured prior to the current leadership team coming in place. We feel our fleet is pretty strong across the board. We continue to look at the markets in which we have fleet. Do we have the right fleet in the right markets?

Last four and a half years of getting the fleet that we existed when we when we came into the company in the spin back in mid 2016 were pretty much.

Beyond.

Any were not remaining fleet in fact, you know we had a great deal that exit in the fourth quarter of 2019.

Well, you know sort of 82 month old type bleep that had been procure prior to the current leadership team coming in place. So we feel our fleet was pretty strong across the board. We continue to look at the markets in which we're not fleet that we have a rightly right market where are the hot hands, where do we need to grow based.

Larry Silber: Where are the hot hands? Where do we need to grow based upon the opportunity? We're pretty comfortable with the makeup and the composition of our fleet as it exists today.

Larry Silber: Where are the hot hands? Where do we need to grow based upon the opportunity? We're pretty comfortable with the makeup and the composition of our fleet as it exists today.

Opportunity so we're pretty comfortable with the makeup of the composition of our fleet doesn't exist today.

Okay. Thanks, and then Oh here in the Kong with the introduction of Aaron mentioned.

[Analyst] (RBC Capital Markets): Okay, thanks. Earlier in the call, with the introduction of Aaron, you mentioned that some of his experience involves M&A. You know, does that change the strategy at Herc at all, you know, potential inorganic growth going forward?

[Analyst] (RBC Capital Markets): Okay, thanks. Earlier in the call, with the introduction of Aaron, you mentioned that some of his experience involves M&A. You know, does that change the strategy at Herc at all, you know, potential inorganic growth going forward?

Some of his experience involve M&A, how does that change that strategy at heart get all your potential inorganic growth going forward.

Well pairs.

Larry Silber: Look, as you know, I've said from day one here, our primary focus is gonna be on organic growth in the business. That was for a number of reasons. We had ample opportunity to grow within our existing footprint and put more volume through our existing footprint. That remains the same, particularly as we add additional footprint in these urban centers that are providing us with outstanding growth and future growth opportunities. That said, you know, we are in an environment today, where, you know, we've completed all of the, what I would call, you know, handcuffs that might have prevented us from considering any opportunities. We now, you know, we are not gonna be actively looking for an opportunity, but if something comes along that's opportunistic, we might consider it.

Larry Silber: Look, as you know, I've said from day one here, our primary focus is gonna be on organic growth in the business. That was for a number of reasons. We had ample opportunity to grow within our existing footprint and put more volume through our existing footprint. That remains the same, particularly as we add additional footprint in these urban centers that are providing us with outstanding growth and future growth opportunities. That said, you know, we are in an environment today, where, you know, we've completed all of the, what I would call, you know, handcuffs that might have prevented us from considering any opportunities. We now, you know, we are not gonna be actively looking for an opportunity, but if something comes along that's opportunistic, we might consider it.

I'm sorry from day, one year, our primary focus is going to be on organic growth in the business.

That was for a number reasons, we have ample opportunity to grow within our existing footprint and put more volume through our existing footprint and that remains the same particularly as we add additional footprint and urban centers not are providing us with outstanding growth and future growth opportunities not said.

We are in an environment.

Today, we're we've completed all of the what I would call handcuffs that might have prevented us from considering when the opportunities.

We now you know.

We are not going to be actively looking for an opportunity, but if something comes along that's opportunistic we might consider it certainly.

Larry Silber: Certainly, Aaron's experience, both on the acquisition and integration of those, will be a tremendous help to us if that opportunity arises.

Larry Silber: Certainly, Aaron's experience, both on the acquisition and integration of those, will be a tremendous help to us if that opportunity arises.

His experience.

Both on the acquisition and integration of Moser will be a tremendous help to us if that opportunity arises.

Okay, great. Thank you.

[Analyst] (RBC Capital Markets): Okay, great. Thank you.

[Analyst] (RBC Capital Markets): Okay, great. Thank you.

And that will conclude today's question and answer the question at this time I would like to turn the call back over to Elizabeth Hitachi for any additional a closing remark.

Operator 2: That will conclude today's question and answer session. At this time, I would like to turn the call back over to Elizabeth Higashi for any additional or closing remarks.

Operator: That will conclude today's question and answer session. At this time, I would like to turn the call back over to Elizabeth Higashi for any additional or closing remarks.

Thank you all for joining us on the call today and as always if you have any further questions. Please don't hesitate to call me and we'd like part of the thing you often.

Elizabeth Higashi: Thank you all for joining us on the call today. As always, if you have any further questions, please don't hesitate to call me. We look forward to seeing you all soon. Thank you.

Elizabeth Higashi: Thank you all for joining us on the call today. As always, if you have any further questions, please don't hesitate to call me. We look forward to seeing you all soon. Thank you.

Thank you.

And that will conclude today's call. We thank you for your participation.

Operator 2: That will conclude today's call. We thank you for your participation.

Operator: That will conclude today's call. We thank you for your participation.

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