Herc (HRI) Bank of America Global Industrials Conference 2022 summary

Growth strategy and footprint

• Strategy combines organic fleet investment with targeted M&A to build presence in North America’s top 50 urban markets; year-end 2021 fleet exceeded $4.4 billion.

• Nearly $500 million of acquisitions completed through 2021; Cloverdale, announced two days before the conference, adds presence in key upper Midwest and Great Lakes markets.

• M&A targets geographic gaps and adds locations, people, fleet and capabilities; equipment acquired in a tight supply market is a benefit, not the primary driver.

• Cloverdale was expected to bring the branch count to 324–325 at closing; further opportunities include the upper Midwest, Rocky Mountain region, and major Western Canadian cities.

• Growth focuses on major metropolitan areas, where infrastructure, data center, warehouse, distribution and EV plant activity supports a broad, steady demand base.

Market demand and fleet investment

• North American end-market demand was described as strong, with constrained equipment supply, industry utilization near record levels and rental rates at the strongest levels in the speaker’s 25-year career.

• More than $1 billion of fleet was scheduled to arrive in 2022; deliveries were largely on plan, with minor 30–45-day delays and deployment expected to support planned growth.

• Planned fleet investment is $1 billion-plus annually for each of the next three years; 20%-plus fleet growth is expected, with economic conditions informing any adjustments.

• Infrastructure planning was developing, especially for roads and bridges; projects were expected to become more shovel-ready toward late 2022 and into 2023, potentially tightening equipment supply and supporting pricing.

• Major projects, including battery and EV plants, data centers and warehouses, were breaking ground or being announced; no delays were seen among projects served, and entertainment activity was above 2021 levels.

Pricing, costs and technology

• Rental-rate growth was 3.2% YoY in Q4 2021; the goal was to progress toward mid-single digits through 2022, with year-over-year growth increasing each quarter.

• Pricing cadence was intended to reach 3%–4%, then 4%–5%, favoring sustained low-to-mid-single-digit increases over a short-lived spike; specialty pricing gains were expected to be seasonal and uneven.

• Equipment costs were expected to rise mid-single digits in 2022 over 2021 and again in 2023 over 2022; rate growth and improved dollar utilization were expected to offset inflation over the fleet’s eight-year recovery period.

• A major ProControl enhancement was forthcoming, integrating telematics, contracts and equipment management; continued investment also targeted delivery visibility and internal data tools.