Thank you. And thank you all for joining us this morning. Welcome everyone to our first quarter 2020 earnings conference call. We all hope you and your families are safe and well. We’re conducting today's call following the Center for Disease Control and Prevention Guidelines, using both social distancing and the use of technology for remote access. Earlier today, our press release, presentation slides and 10-Q were filed with the SEC and are all 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. We’ll review the first quarter, our view of the industry and 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. I would caution you that our actual results could differ materially from these 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 Factors 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 our webcast on our website. Replay instructions were included in our earnings release this morning. 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.

Thank you, Elizabeth. And thank you all for joining us this morning. It's been quite a start to 2020. The quarter began as expected with volume on rent and pricing relatively solid and moving in the typical seasonal patterns. Then in late March, our business was impacted by wave after wave of COVID-19 related disruptions for activity in major metropolitan markets that has significant impact on rental volumes. While the velocity of the economic downturn is unlike anything any of us have ever experienced, the senior leadership team on this call has on average more than 30 years of experience in the equipment rental industry. We've experienced several recessions and other unexpected events that temporarily impacted rental equipment demand. And while this pandemic surprised everyone, we're taking steps to manage through the changing environment. When business conditions recover, we intend to be optimally positioned to assist our customers in the turnaround. The impact on our end markets has been fast and we had to react very quickly, putting in place our recession playbook in short order. First and foremost, our reaction to the onset of the COVID-19 pandemic was the focus on the health and safety of our team, our customers and our communities. And we quickly communicated and implemented actions to take precautions to prevent the virus from spreading. We have a resilient business model and rent equipment to a diverse group of customers and industries, many of which provide essential and critical business services. That diversity should help mitigate some of the impact of the COVID-19 pandemic on our business results. Our leadership team worked quickly to evaluate the rapidly developing trends we were seeing in the market, and adjusted our business to take into consideration the potential impact of the pandemic. In evaluating the changing environment, we took steps to cut variable costs and net capital expenditures. Aaron will cover in detail the steps we have taken to adjust our business activities. We also developed various downside scenarios to assess our ability to manage in an increasingly challenging environment. Mark will discuss those assumptions later on our call. We are prudently managing our balance sheet and are well-placed with modest leverage and ample liquidity to sustain our operations in even the most difficult environment. Our disciplined capital management approach is an important element of our strategy, and we’ll continue to make adjustments as necessary to efficiently operate and support our customers in this uncertain environment. Now please turn to Slide Number 4. We implemented CDC recommendations across all of our operations and re-enforced hand washing, social distancing and the avoidance of touching your face, as well as infection control at work and in the home in frequent communications. We restricted non-essential travel and moved 95% of office staff to remote work in early March. We put in place policies regarding sick individuals and self quarantining, and stepped up procurement of essential cleaning materials, protective gear and disinfectants. We implemented additional cleaning procedures for our branch operations and for returned equipment. We are now monitoring and following CDC recommendations with respect to screening employees and instituting protective measures for employees interacting directly with customers. And while we enhanced our operational and safety procedures and have been operating in a challenging environment, all of our regions I'm happy to say have reported at least 85% perfect days. Before I begin the discussion of our results, I want to thank all of our team members for their work, supporting the critical and essential work of our customers and communities in this challenging environment. I'm proud of the can-do attitude of our team as we work together to navigate this challenging time together. We remain ready to support our customers' operations and whatever capacity we can in this uncertain time, and especially when construction and business activities resume. The health and safety of our team our customers and our communities remain our highest priority, while we continue to provide the equipment and services required by our customers. Now please turn to Slide Number 5. We're pleased with our performance in the first quarter despite the COVID-19 related disruption that started in mid-March. We improved pricing once again. We achieved excellent flow through from better operational efficiencies. And we continued to generate strong operating cash flows and are well positioned with ample liquidity to fund our business needs in 2020. Now please turn to Slide Number 6 for a brief overview of our first quarter financial results. Equipment rental revenue grew 2.4% or $8.9 million to $386.5 million. Total revenue declined to $436.2 million due to lower sales of used equipment and lower retail activity. We reported a net loss of $3.7 million or $0.13 per diluted share in the first quarter of 2020, an improvement from last year's net loss of $6.7 million or 23% per diluted share in 2019. Adjusted EBITDA increased 3.8% to $147.7 million in the first quarter, reflecting the success in our cost control initiatives. Adjusted EBITDA margin was 33.9% for the first quarter, which was a 400 basis point improvement over the prior year. Now I'm going to ask Aaron to pick up from here to discuss our first quarter operating performance and the current environment.

Thank you, Larry. Before I begin our discussion today, I'd also like to thank our team members for the professionalism and the dedication they're exhibiting throughout this new COVID-19 environment. This has been a shock to what is typically the beginning of our seasonal uptick in rental activity. Our branch managers, our counter staff, mechanics, truck drivers, yard workers, and our sales organization have been serving our customers and continuing to deliver what we call live service while anticipating and meeting the needs of our customers. They are on the front line every day and we want to make sure they know they are appreciated by all of us. I also want to thank our support teams and operations fleet procurement and safety as they provided tremendous field support. Now let's move on to our discussion of first quarter operating results. Please turn to Slide 8. Shelter in place directives had an immediate impact on our entertainment business starting in mid-March. Film and TV productions, music festivals and sporting events were postponed or canceled. In a few major urban cities, construction sites were closed down as municipalities and states began to limit activity by non-essential businesses. Our OEC on rent peaked in mid-March. We immediately worked with our customers who were forced to stop activities midstream to help them consider how to handle the fleet they wanted to take off rent. Where possible, if the equipment was secure, we left the equipment on site but took it off rent. This enabled us to keep transportation costs down, assist the customer and should make it easier to start renting once activity returns. We are closely monitoring our rental activity and rental volume at all of our branches. We have experienced lessening demand and are making adjustments to our staff hours on a branch-by-branch assessment. We are regularly reviewing branch rental volume transaction activity, rental revenue trends, fleet utilization and other key metrics. About half of our branches have reduced certain staff hours through either rotating one week off a month or taking one or two days a week reduction in hours, affecting about 10% to 12% of our employees. We monitor these trends closely and we'll take additional action if necessary. We are maintaining health and welfare benefits for all of our furloughed team members as we value their experience and expertise. Please turn to Slide 9. Specialty includes post solutions and Pro Contract now accounts for approximately $840 million of OEC fleet, or about 22% of our total fleet as of the end of Q1 2020. Our core fleet of aerial material handling, trucks and trailers and earth-moving are also broken out on the slide. Our fleet expenditures at OEC were $109 million in the first quarter, about flat with the prior year's quarter. The COVID-19 market impacts began in late March. So we were well on our way into the normal Q1 capital expenditure cycle. We responded immediately by canceling purchase orders and cutting back on deliveries. These adjustments will show up in Q2 and Q3. OEC disposals were $110 million, substantially lower than the $193 million of OEC we sold last year. Our disposals were down in the beginning of the quarter as part of our strategy to minimize replacement CapEx requirements. Then with markets shutting down by the end of the quarter, the resale channel started to tighten up. We're okay with selling less fleet. Our fleet age is young enough that we can sweat the fleet a bit, even incur a bit more maintenance as we keep the fleet rental ready. We could possibly push used equipment sales out until next year and we hope to see more normal economic and used equipment sales activities. We sold approximately 47% of our fleet through auction in the first quarter, down a bit from the prior year due to the tightening of auction channels in late March as most of our markets started sheltering in place. The average fleet age as of March 31, 2020, was 46 months, flat with the same period last year. There's plenty of room for us to age our fleet while we manage through this COVID-19 induced economic slowdown. A quarterly break out of this information along with a rolling balance of our total fleet is also in the appendix. Please turn to Slide 10. We have a diverse customer mix with many of our large national accounts customers operating in the essential business sectors. Most of our locations are open for business, and our team is on the ground looking for opportunities to support our communities. Our rental revenue by major customer segment for 2020 is shown in the composition chart on the left side of the slide. Contractors represented 32% of equipment rental revenue, followed by industrial customers with 31%. Other customers represented 19% and infrastructure and government increased to 18% of the total. National account revenue represented about 45% of the total for Q1 with local rental revenue now representing 55% of total rental revenue. Our national accounts are primarily considered essential businesses as they include major industrial customers, such as utilities and energy, healthcare and agriculture. This segment of business has been a lot more resilient in the COVID-19 slowdown and is a key strategic advantage for Herc. Our work for local, state and federal government and infrastructure projects is ongoing and as noted, accounted for about 18% of rental revenue in the first quarter. We're also supporting the health and safety initiatives of private and public responders through rentals of power generators, climate control, temporary containment wall structures and lighting. Our sales organization is staying focused in a difficult environment. Our near-term sales efforts are focused on essential businesses and activities that are continuing within the shelter in place directives. These include sectors such as government services, healthcare, warehousing and distribution, industrial manufacturing, and emergency services contractors. Ours is a relationship and solutions business, and be it virtual face time or phone calls, our sales organization is focused on staying in touch with our customers despite the shelter in place mandates. Our entire team is doing an outstanding job and we intend to continue to ensure that we operate safely and efficiently while serving the needs of our customers and communities. I'll now pass the call onto Mark.

Thanks, Aaron, and good morning everyone. On Slide 12, we have the financial summary of our fiscal quarter 2020 results, driven by rate improvements that offset a slowdown in volume on rent. The first few months of the quarter were consistent with our expectations going into the year and on a similar growth trajectory for the last couple of years. Then the COVID-19 induced shelter in place initiatives began in mid-March to have a significant impact on our rental volumes. This impact was only felt in the last couple of weeks of the quarter, so the quarterly results do not fully reflect the COVID-19 impact, and we will provide some more discussion on what we are seeing in April in a couple of slides. Equipment rental revenue increased 2.4% to $377.6 million to $386.5 million in the first quarter of 2020. Total revenues declined to $436.2 million, primarily due to lower sales of rental equipment, which Aaron has already covered. Adjusted net income in the first quarter was $1.1 million or $0.4 per diluted share compared with the net loss of $6.5 million or $0.23 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 the first quarter of 2020 increased 3.8% or $5.4 million to $147.7 million over the same period in 2019. Adjusted EBITDA margin improved 400 basis points year-over-year to 33.9% in the first quarter. The first quarter reflected excellent progress in terms of flow-through. We reported REBITDA year-over-year flow-through of 107.4%, which benefited from absolute reductions in SG&A and lower DOE. Our focus on rate growth, CapEx, and self-help cost initiatives has helped tune a small amount of rental revenue growth into a decent amount of EBITDA growth and free cash flow. As a result, we grew REBITDA margin by 180 basis points to 38.1% during the first quarter of this year a record for Herc. On Slide 13, we highlight our progress on pricing and dollar utilization. The graph on the upper left illustrates our year-over-year pricing with the latest quarter up 2.4% over last year. Our pricing improvement continued in the initial part of the first quarter, and we generated another quarter of good rates. The impact of the COVID-19 slowdown is not apparent in these numbers, which is still not yet clear. The initial COVID-19 impact was volume-related, job shutdown work stopped and the gear came in or got caught off rent. Demand was effectively shutdown so it wasn’t really a rate negotiation type of environment. Certain segments like oil and gas that are in a slightly different cyclical slowdown are also looking for rate concessions. But for the most part, the impact to date is in the volume. The chart on the top right of the slide shows the average fleet that we see was up 1.7% in the quarter over last year. As Aaron mentioned, we were on track with our normal capital expenditure cadence pre-COVID, which is typically front loaded to Q1 and Q2. We had a decent amount of CapEx on our yards, all being delivered by mid-March when the economic impact of shelter in place initiatives became apparent. Since then we’ve kept most CapEx that was scheduled post-April, and are looking to reduce CapEx in 2020 to somewhere around half of our 2019 net CapEx. The bottom right chart shows the detail on an average fleet on rent or rental volume during the first quarter of 2020, which was 2% compared with the prior year. Rental volume was solid in comparison to prior year pre-COVID-19, and began to trade negatively in the back half of March. Despite the initial impact of the COVID-19 slowdown, first quarter dollar utilization reached 35.7%, an increase of 10 basis points over 2019, a historic high for the first quarter. The adjusted EBITDA waterfall on Slide 14 shows adjusted EBITDA for the first quarter was $147.7 million, an increase of 3.8% or $5.4 million compared to $142.3 million in the first quarter of 2019. The chart starts with higher equipment rental revenue, up $9.2 million over the prior year. Despite growth in rental revenues, direct operating costs were down $0.5 million for the first quarter of 2019, primarily due to strategic reductions in freight and delivery costs. These reductions were partially offset in the first quarter by increased personnel and personnel-related expenses and facilities costs. SG&A expense declined 2.4% to $59.8 million as we reduced professional fees significantly. Both savings were offset by higher personnel-related expenses and an increase in bad debt reserves. As you should all be aware by now, we like to focus on REBITDA as this measures the contribution from our core rental business without the impact of sales of equipment, parts, and supplies. We believe REBITDA provides a better comparison with our industry peers as it excludes the impact of varying depreciation policies. The combination of improved rental revenues and a reduction in our cash operating expenses led to a REBITDA year-over-year flow-through of 107.4% and drove a 180 basis point improvement in REBITDA margin to 38.1%. Overall, a solid quarter and we continue to deliver on our margin improvement initiatives. Aaron has thanked the ops team but I'd like to take a little time here to thank the field support team for their contributions to these results, and the contribution to getting our results out in a seamless and timely manner. Our back office went from working in the office to working at home with a short couple of days' notice. And thanks to efforts of IT, HR and finance teams, we pulled it off pretty much seamlessly and without a hitch. We remain productive and effective and are providing white-glove service to our branches and customers. Please turn to Slide 15. For the quarter ended March 31, 2020, free cash flow was $39.2 million. This quarter’s free cash flow was impacted by the timing of an interest payment on our notes and lower disposals of rental equipment. Net leverage decreased to 2.7 times compared with 2.9 times a year ago, solidly within our targeted range of 2.5 to 3.5 times and our credit ratings are a solid B1 and B+. Total debt was $2.1 billion as of March 31, 2020, about the same as the prior year and with no near-term maturities as a result of the refinancing of the senior notes and ABL credit facility last summer. The actions we took last year to refinance our balance sheet have us well positioned to navigate through the challenges ahead of us. We have no material covenants on the senior notes and no material covenants to be tested on the ABL until availability is below 10% or $175 million. We had ample liquidity of over $1.1 billion as of March 31, 2020, comprised of $954.4 million on our ABL credit facility and $127.1 million on our AR securitization with cash and cash equivalents of $55.8 million. Our business model is resilient. And as a result of the adjustments we've made to fleet CapEx and reducing our variable expenses, we are not a significant consumer of cash and should be able to generate free cash flow in 2020 on the current projections for the economy as it opens up in the back half of the year. On Slide 16, this discusses further some of the COVID-19 impacts we have seen to date. How quickly things have changed from our last quarter call. Many economists are now forecasting second quarter GDP could be down anywhere from 18% to 38% compared with last year. The consensus forecast shows some recovery in the third and fourth quarters, but for the year, GDP could be down 2% to 7%. Construction costs across the country have been slowed by either site closures or lack of workers. Such forecasts suggest non-residential construction starts could be down 13% in 2020 with a 5% recovery in 2021. The situation is fluid and facts change rapidly from week to week. Luckily, Herc has a leadership team of seasoned industry veterans and have rapidly implemented the down cycle playbook over the last month or so. Slide 17 shows how our business has been impacted to date. With the situation developing so quickly and within such a short time, we will discuss what we've experienced so far in April, and you can extrapolate out based on your assessment for the remainder of the year. April rental volumes are trending down by approximately 15% to 20% in comparison to the prior year, which could potentially have a negative impact on April rental revenues of 20% to 25% versus the prior year. The entertainment business was particularly hard hit with studios and the event business shutting down. The national accounts business has been more resilient as it has weighted heavier towards the essential services and some part of our specialty business are actively involved in setting up testing facilities and temporary healthcare facilities. This looks to be the extent of the impact in a fully sheltered North America. We have recently seen some positive signs that the decline of volumes might be bottoming out. At least the rate of decline has reduced significantly. We monitor activity on a daily basis and adjust accordingly. We believe that the length of the closures will determine the severity of the impact on our 2020 results, which remains highly uncertain. We've taken immediate actions to dramatically cut variable expenses, including overtime, outside transportation costs, hourly labor at impacted locations, free rent, etc. Our focus is on taking out external costs while maintaining our core team intact. We are not anticipating significant layoffs in the current environment and are maintaining all the healthcare benefits. Our focus is on team Herc and our customers. We have invested in our team and our team will be intact coming out of this crisis to respond to rental opportunities and service our customers and communities. We have a fixed cost business model to a certain extent, and the amount of flow that we generate in good times limits the amount of cost we can cut in tough times. There will be an impact on our margins despite the cost savings we have implemented. We should be able to manage decremental REBITDA margins in the range of 45% to 55% in current conditions. Emphasis here on REBITDA margins as EBITDA will have an impact from our lower equipment sales volumes. As discussed, we've taken action to substantially reduce our capital expenditures and should be able to reduce 2020 net CapEx to somewhere around half of what we spent in 2019. Even in this scenario with rental revenues down by 20% to 25% for a number of months, we are unlikely to consume cash and could still end the year with positive free cash flow. Given the uncertainty of the impact of COVID-19 on future North American business activity and our business specifically, we are withdrawing our 2020 guidance. At the beginning of this presentation, Larry focused on our business priorities on the same slide as the pyramid, which shows our vision, mission, and values. These statements guide us in good times and challenging times. How we manage through these challenges will define us as a company, as leaders and as individuals. We are committed to making Herc the employer, supplier, and investment of choice, and we intend to emerge from this challenge better and stronger. And now I'll pass the call back to Larry.

Thank you, Mark. Before we go to Q&A, I'd like to summarize where we are today. Throughout this challenging period, we will stick to our purpose, and that is to equip our customers and communities to build a brighter future. We intend to support our customers in this challenging environment with a team committed and dedicated in a safe and healthy environment. Our business model is resilient and we're committed to the strategy we laid out four years ago. We believe our response to this changing environment has been swift and executed well. We have taken steps to cut costs and reduce capital requirements. We have a solid balance sheet and ample liquidity with no near-term maturities. We're sticking to our stated goals and through solid execution, we intend to improve value for our shareholders, customers, and employees in the long term. And now for your questions, operator please open the lines.

We will begin the question-and-answer session. Our first question is from Jerry Revich from Goldman Sachs. Go ahead.

Can we expand a little bit more on the pricing comments that you folks made in the prepared remarks? You mentioned there are some price concessions coming in the oil and gas markets. Can you just expand on the order of magnitude and just update us on what proportion of your business could be impacted, and how do you expect that to play out relative to your other end market if you will?

I mean the whole pricing situation is fluid and very hard to sort of give a lot of carry on. Oil and gas totals something low-single digits in our business that’s upstream and downstream. Typically, the pricing impact on the upstream business, which say is less than 5%. But just given the magnitude of this oil and gas, we also see downstream conversations taking place, and that's mid-single digit in terms of that sort of low-teens that we're talking about. As case-by-case it's customer by customer, so it's not really something that we can give you, and there's not even something that we’ve got clarity in terms of how that impacts us directly. I think we'd be happy to get out of the quarter with flat pricing, but it’s still early days and we've kind of have to play the rest of the quarter out.

And then in terms of the CapEx outlook in the free cash flow comments. Should we essentially think about CapEx going next to zero for you folks? Are there any areas where you folks will be investing in the fleet because I don't think we have had this type of utilization decline at least as long as financials are available if this business…

So the direction we're giving for the year is about half of 2019, so that's still a positive, and there is still some positive CapEx in there. And we still will be spending a small amount of CapEx every month. There are opportunities in the specialty business that we have some pockets of the business that have slowed out. So there’s a small amount of CapEx that happens no matter what the environment is, but it will be dramatically reduced. And as I see it somewhere around half of what we spent last year.

And lastly the flow through comments were pretty encouraging of 45% to 55% of decremental margins. Can you just talk about what parts of the cost structure you're able to scale back and looks like that implies, correct if I'm wrong, Mark, that you're able to reduce operating costs, I call it 70% of the sales decline and maybe just flush that out for us in terms of what enable you to cut costs so significantly?

So it's an experienced team. We've had all those sort of key notes in the playbook really quickly. This happened so fast, it's been a busy couple of weeks. Outside Hauler, we've effectively taken out of the business. We've adjusted hourly wages at certain locations that are seeing a dramatic volume drop. So there's a cost savings there in terms of our wages. We have maintained healthcare costs throughout, so that's something that we're continuing to focus on supporting, we think that's very appropriate in this environment, re-rent overtime. So just about any variable costs that we've been able to make an adjustment to we've sort of gotten into and just taken out there being anything that sort of leaving the business. But outside consultants or outside expenses, we'd like to cap and we've sort of looked to maintain our expenses in terms of payroll and internal costs as much as we can.

Our next question is from Ross Gilardi from Bank of America. Go ahead.

I'm glad to hear you guys are doing okay and you mentioned the business the best you can through this environment. Mark or Larry, I was just wondering if you could elaborate on the decline in fleet on rent of 15% to 20% in April with total amount of revenues down 20% to 25%. Is the difference pricing or mix, or maybe it's both? But can you help us bridge that gap a little bit?

So like I said, there's a small impact on pricing that we really haven't got completely mapped out on month but it's mostly volume. It's a mix and volume. The AGS and entertainment business does price at a premium. And the mix of some of the business coming up, for instance, is having that sort of slightly different ratio in terms of volume to rental revenues.

And I was curious about the comment that you think the declines in fleet on rent bottomed out. Are you suggesting that initially that down 15% to 20% was down by a greater amount, and now it's only down 15% to 20%? Or are you running rating down something less than 15% to 20% as we sit here today? I mean I realize this is like day to day…

I think initially we started out with the major metropolitan markets, things coming off rent and it's been trailing and been holding at that level that we talked about in that 15% to 20% now for a couple of weeks. So that's why we say we think we may hit a point in which it's somewhat near or at the bottom, and we're optimistic that as businesses and customers open up over the next several weeks and months, that we can impact that in a positive direction.

And that decremental margin range that you mentioned for the rental business, I'm assuming that that assumes you don't have any material price degradation, which I totally understand the reasons to believe that in the immediate term, but I just wanted to clarify that. And at what point, Larry, do these or any members of the team, do you think the pricing conversation changes? Like when does the industry maybe have to blink? Like if this goes on for another, if you're sitting here at low to mid 50s or even something below 60 time utilization getting into midsummer, is that kind of a point where the pricing environment starts to get more difficult or any thoughts on that as to how long this remains just a timing event versus something with potentially more severe pricing pressure?

So two things. There was an assumption of modest pricing decline in that 20% to 25% number. Like I mentioned, certain statements that have been affected are sort of premium price but not dramatic as you say is not material. And it's pure speculation as to what happens on the way out. So just might that would say that if it's a slow creeping roll out and that gives more opportunity for pricing negotiations and sort of a supply demand balance, that things open up pretty quickly the same way that they shut down, then I would think it's more of a just get back to work and get the feed on rents in midst of a price, negative price environment.

Remember, you can't generate demand with pricing. Demand is going to be what demand is and generally our customers that we've been fortunate enough to supply in the past are valuing the service and the reliability that we provide them. And we would expect that need to continue and we'll continue to try to maintain our pricing structure that we had going into this coming out of it.

Just the last one I wanted to ask just on this, and I'll turn it over, the free cash flow. I mean I understand you're saying you expect to be positive free cash flow but the comment sounded a little bit tentative. I would think given the CapEx reductions and what you're doing on the cost side that positive free cash generation, essentially pretty significant free cash generation would be kind of a given and year one of a downturn, this is a very unique downturn. Can you elaborate on that a little bit? And I don't know if I heard that wrong, but what are the variables that you're considering, like is it a matter of whether or not you have sizable cost restructuring charges to take? Or why wouldn't it be kind of a slam dunk that the company is going to be very comfortably free cash positive this year?

I mean there's just not a lot of slam dunks out there where we sit today. So the variability is just how long we're sheltering in place and what the extent of the shutdown is. Assuming that this is a couple of months of shutdown and we start opening up in the summer then yes, we should be free flow positive. But if this was to drag on for the whole year then that starts becoming a little bit more of a challenging scenario.

And I would add to that, Ross, the used equipment market has tightened up. And so we're going to be not selling equipment, which generates cash. We're going to be aging our fleet sweating it a bit and not generating cash from the sale of used equipment, which is another variable.

Slam dunk was an inappropriate term, so I’m sorry I used that obviously a lot here…

Our next question is from Rob Wertheimer from Melius Research. Go ahead.

So thanks for clarity on April, it's obviously very helpful in an uncertain world to know how far things are down. If I can ask just a bit more and I understand it may be so much, but I mean is there wide variation in the end market. So if you were to take California or the East Coast was that down like 30, and that's the true bottom in an actual shutdown parts of the state not being. I don't know if you have any color on that or on declines on your contracted versus infrastructure versus government kind of…

We do have sectors that are performing as usual, a lot of the government infrastructure sectors are still performing very well. As we mentioned, our specialty business is performing well. And then when you look at geography, it tends to be a lot more rural markets have less of an impact. And then the urban markets really depend upon the actions, the stay-at-home actions and the severity that the governors have put in place. So there are some variations out there for sure in our entire network.

And then maybe this is just for you Larry, and it's early I understand that in a very uncertain environment. Could you talk about sweating the fleet and aging out the fleet? When you look at forward indicators, we may have a construction slowdown for a year or two who knows. What do you think about sort of shrinking the fleet just allowing some sales and shrinking it down, maybe the right down in the industry should do, I don't know if you consider that to be the right thing for you to do.

At the moment, we're at a point where we aren't really considering that. There will be some natural attrition on some retail sales of used equipment out of branches but we're not going to really focus on the wholesale or the auction activity of the fleet out of the branches. Our fleet age is about 46 months going into this COVID period. We can easily age this fleet to the mid-50s without too much additional costs on R&M, picking up a couple of percent on R&M over the next year, year and half. And we can age the fleet. But I don't think at the moment, unless some industry is absolutely dry up and go away, I don't see us shrinking our fleet at the moment. We were planning to grow our fleet modestly this year. We have a number we said earlier in the year we're going to have six to ten branch openings this year. So we can, instead of buying capital for that fleet, move capital around into those locations and consume that fleet in those new markets.

Our next question is from Brian Sponheimer from Gabelli Funds. Go ahead.

My best to all of you and also to everybody else that's on the call. I just have one question. I think there’s been a lot of good ones that have been asked. But as you are putting fleet to work in what would typically be thought of this kind of temporary support for this relief effort. Does any part of that seem like it could be a permanent sort of rent and could you maybe quantify what that might look like on an annual basis?

There's been quite a bit of activity in what we call healthcare hospital, pop-up tents, drive-thru testing tents, and even some activity with the federal government, specifically the military across different geographies in our business, a lot of it's on the Eastern Seaboard and down the South Central part of the country and on the West Coast. So a lot of that is still being put in place even right now. And as far as how long it'll be put in place, it's hard to know. Some are being advised it'll be for the rest of the year. Some of it is just, hey, we don't know how long it might last. But can't really clearly define how long, but there is a lot of activity in that place, in that segment absolutely.

Right now, I think all of the major auction companies have reverted to online auction events and I think that's the dominant activity going on to today. It'll be when the lifting of gathering with thousands of people in a location, a live auction on the ground is no different than a sporting event, Brian. We got a lots of people gathered close together, a lot of frenzied activity. And that will be, I think it’s when you see sporting activities and related type of activities open up. So for the moment, the online activity is not as attractive to us. We saw some degradation in returns at the end of March, so probably 10%, maybe as much as 15% below where we would have expected and wanted to be, and that hasn't changed our mindset in terms of what we're going to do with our fleet and obviously, we cut back to CapEx for new gear. And we knew we have been working towards reducing the age of this fleet over the last four or five years. And we got to a point where we can age it. And we're comfortable with aging it and comfortable with the type of expense we might experience in aging itself. Look, I think the live auction activity is probably akin to when Major League Baseball comes up again and they're putting people in stadiums.

And I guess just last one for me, just thinking about this longer term, I would imagine that you are potentially looking at this as a way to show your value proposition to customers where you could end up gaining some share, not only potentially from your competitors but also just more of a secular shift to the rent versus own. Can you talk about that?

I think anytime you have uncertainty like we have today in terms of the economic environment. When customers get work, they're going to be a little trepid in terms of investing in ownership capital, and it'll naturally create a shift to rental. And we'll certainly expect that coming out of this until there's a regular and more certainty about the economic environment in the future, I think we'll see more shift. I think where we'll pick up share versus our competitors is probably more around the mom-and-pops that sort of fall out and don't survive this. And those customers that may have traditionally gone to an alternative or smaller channel will revert to those that are around and providing the type of customer support and operating the way we're operating in a safe and healthy environment.

Our next question is from Steven Ramsey from Thompson. Go ahead.

A few questions I guess centered around the local customers versus national customers and clustering, I guess to start with the clustering strategy and since that naturally aligns around the metro areas. I guess, maybe talking about if there is any near-term magnified headwind from the clustering in metro areas where it slowed down sooner, maybe how that gives you flexibility in the near-term. But then is there an accelerated push out of this once things pick up because of the clustering strategy?

Steven, I would say in our urban strategy, typically in our urban network, we have a very, very diverse amount of fleet. All of our segment and strategies are at play in those urban settings and to a less degree in our more rural or non-urban settings. So I think that's allowed us to, in urban settings, kind of weather this storm because we're very, very diversified with products and customers. And for most markets, they remain to be allowing essential activity to go on. So I believe that once activity gradually starts to come back, let's say through the month of May and April, that those markets will accelerate more rapidly. So again, we like our strategy we've been deploying for a number of years.

And then the April decline in rental volumes, can you maybe discuss maybe on a range of, were local accounts down 28% and national accounts down low double digits. I mean, maybe just kind of the dichotomy of the drivers in local versus national rental revenue declines?

I don't think we want to get too specific, Steven, by segment, and it does vary a lot, which is probably not really a lot of point. But the local business has obviously contracted a little bit more than the national account business that national account business's biggest customers focused on essential services, so it has been a much more resilient portion of our revenue mix than the local customers.

And can you then talk to, when you talk about resiliency? Is that like holding up at flattish or just any order of magnitude to think about what you mean by resilience?

So maybe the national account business is up 5% and it's 40% of our book, so the other segments taken on slightly bigger drop.

And in conversations with local accounts. Is there any concern, maybe it's too early to tell, but concern on the survivability of local accounts or collecting revenue receivables from local accounts?

So I mean, in terms of survivability, I mean it's too soon to see because we're right in the middle of this thing and there's not a lot of visibility to the other side. Understandably collections are challenging in this environment. Some of the local accounts have been shut out of their office and some of it with their business shutdown and it puts pressure on their cash flows. So we have seen a slowdown in collections and do anticipate that these are going to be impacted through this environment.

Our next question is from Seth Weber from RBC. Go ahead.

Most of my questions have been asked, but maybe this was for Aaron. But in your conversations with customers, are they have the mindset that these projects rather being delayed that are not occurring. Are they just being postponed? Or is that the view that these projects will happen or projects just getting canceled out? Can you just shed any color on discussions you’ve been having around that? Thanks.

I mean, going into this the market was very strong very solid. And I think once people get back to work on a regular, I don’t know if regular is the right word. They go through May and June as we see markets and job sites kind of pop back up. I think it'll be a surge to finish the existing projects that were already broken ground and finish that up. The question is, hey, what does it look like later on with pipeline work down the road with new projects opening up. But I think that there's going to be a fair amount of brisk return to work and volumes once we see a little bit more sunshine here and hopefully in the near future.

And then on the entertainment and the event business, I apologize if you've broken this out. But can you talk to how big that business is? What does it represent as a percentage of your revenue at this point? I think it's kind of unique to what Herc does versus some of the other peers out there. Thanks.

Yes, it's like mid-single digit.

Our next question is from David Russell from Evercore.

On the gen rent side. I'm curious how do the jobs that were temporarily shutdown due to government actions with the assumption when the economies reopen, however uneven that is, it would see an immediate return to work. Can you give us some sense of what percent of your fleet is currently idled on those types of jobs? Well, then the assumption is the rest is just truly weaker end demand broadly. Could you give me a sense of that percentage?

David, about 5% of our fleet is idle right now, it's on a job site ready to go back to work.

So they are still sitting idle just turned off payment turned off, but they can start immediately once those jobs are reopened from the government, correct?

Yes, we have worked with our customers to post a return to starting the rental agreement backup. So once they get back to work that amount of fleet will automatically go back to work.

And then on the net CapEx cuts, obviously, there's some assumption of how you manage your fleet with a time you said that that would produce. Can you give us some framework on how you thought about those CapEx cuts gross to net because you're assuming X percent kind of time with that level of fleet size?

No, I mean, it's not really that direct. So we just kept everything really to except for specialty business and like I said, some hot cut costs that are still in the mind. So really it was a matter of just chopping it back presuming flexibility in terms of our free cash flow and just preserving cash. So as we have for backup, there's a lot of fleet available to go back on rent just with the stuff that's come off rent and we'll just manage demand on the other side as we see it. We've got capability to adjust to that but we aren’t really just took out everything that was considered non-essential and it wasn't going to be active through the slowdown.

Was the CapEx cut focus on cash flow priority, or was it focus on we assume at this fleet size we should get this relative time use and not the implications on rental rate. So the cuts were a little more of a cash flow centric decision, is it fair…

Yes, everything nonessential was focused just to maximize flexibility on the way out.

This concludes our question-and-answer session. I would now like to turn the conference over to Elizabeth Higashi for closing remarks.

Thank you everyone. And of course as always if you have any further questions, please feel free to give me a call. Talk to you all later. Stay safe and stay well. Bye-bye.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.