Herc Holdings Inc. (NYSE:HRI) Q3 2023 Earnings Call Transcript

Mark Humphrey: Yes. And then, Ken, in terms of sort of the midpoint guide moved down, I tried to cover that off in my prepared remarks. But really, there was sort of driving three factors there. One, we said in Q2, right, that we anticipated that M&A activity would help fill that impact that we were feeling from Cinelease. And I think that the reality is that the M&A is opportunistic. And just from the cadence of the closes particularly year-over-year, those have been pushed out further into Q3, really the activity that we had in Q3 was done three days before quarter end. And so that activity is pushing out into Q4 and then even possibly into Q1. So that was a big driver there. I think that the cuts and the impact from Cinelease is deep. And I think lastly, no storm activity in ’23, particularly comp up against’22 is also an impact that we had to take into consideration, and we’ve got visibility now here in October that it’s not going to happen.

Operator: We’ll take our next question from Seth Weber at Wells Fargo.

Seth Weber: Hey, good morning. I just — I wanted to just clarify, make sure I’m understanding the CapEx message for this year, was there a — has there been any change to your gross CapEx number for 2023? Or is it just — I think I heard some comments about some growth CapEx getting pushed to ’24 million versus ’23. I’m just trying to understand your new CapEx range, does that incorporate any changes on the — what you were planning to buy side or taken for 2023?

Mark Humphrey: Hey, Seth, it’s Mark. Good question. I think really, we tried to put this in prepared remarks. But really, it’s an impact and a combination of two things, right? We had some 2023 orders pushed out. And then obviously, we’re disposing of a bit more here than we had originally guided to. And we mentioned that in the prepared remarks as well. I think the only other thing I would say to you is that in Q2, right, we guided to the low end of the range. And so really, this is just us tightening that range up for you, but there’s no difference or variance to really our messaging from Q2.

Seth Weber: Okay. And is the push out something that happened during this that you observed during the third quarter? Because I think — I feel like you had sort of in the second quarter, you had talked about some deliveries and stuff moving around as well. Is this an incremental update where more stuff is getting pushed into 2024 or it’s kind of improving?

Aaron Birnbaum: Yes. In the remarks Larry mentioned some of the product types like access equipment, which is we call them some material handling and some aerial booms, they’re getting pushed out just like they did in ’22 and kind of rolled into ’23. Some of the stuff we wanted in ’23 is rolling into ’24. Now we’re getting some of that product, but we’re not getting as much of the product as we desire to have. So that’s really the sequence that’s happening. The other parts of the supply chain are working better than they have in the last three years. But there are, the access equipment that is kind of rolling over into the next year. And as I mentioned also, some of those product types and access equipment, part of that equipment got the highest demand in the marketplace. So we’d like to get more of it, but we’re not able to — some of our expectations of receiving it this year is kind of rolling over to ’24.

Seth Weber: Got it. Okay. So it’s not — you wouldn’t characterize it as a change in your demand for the equipment?

Aaron Birnbaum: No. If we could get more access equipment, we would take it as soon as we can get it.