Good day and welcome to the Herc Holdings Third Quarter and Nine Months 2020 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Elizabeth Higashi. Please go ahead.

Thank you, Sara. Good morning. Thank you all for joining us and welcome again to our third quarter and nine months 2020 earnings conference call. 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 third 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 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 Factors section of our annual report on Form 10-K for the year ended December 31, 2019 and our quarterly reports on Form 10-Q. 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 materials. 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. 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. If we can start with Slide number 3. 2020 will certainly go down in the record books as the year that Herc Rentals rose to the challenges of COVID-19 and numerous natural disasters. Faced with the impact of COVID-19 on economic conditions in our markets, our team has continued to deliver outstanding cost savings and efficiencies despite the challenges of extra safety precautions relating to social distancing and wearing protective personal equipment while serving the needs of our customers. Our inherent strengths and our quick reactions contributed to better than anticipated results in the third quarter, and we are cautiously optimistic about the balance of the year. As an essential service, our locations remained open for business and we have continued to provide our customers with rental equipment as and where needed, with the exception of our dedicated entertainment business locations. In the top tier, we are the third largest rental company serving North America with ample scale and capital resources to provide a broad range of equipment that supports a wide variety of customers and industries. We have made strategic investments and resources to build our specialty equipment rental business over the last four years. These investments were well placed and have expanded our ability to proactively assist customers in response to the pandemic and weather-related events this year. Our strategic customer and fleet diversification has also helped to offset the COVID slowdown we experienced in certain parts of the business. Our national account customers are also weighted towards essential services, and many remained active during the shutdowns. Our national accounts represented 44% of our rental revenues. These customers are a strategic advantage for Herc with an average relationship now of over 27 years. We remain committed to providing excellent customer service and providing stability and consistency to this significant portion of our revenue base. Our customer-centric culture and high priority for safety also provide a strong foundation as we serve our customers and keep our team and community safe. As we adjust to this new and challenging environment, the strength of our organization and our business have been more evident than ever. We produced our highest EBITDA margin since the spin-off as we continue to close the gap with our peers. Our specialty ProSolutions business delivered double-digit year-over-year rental revenue growth in the quarter. We continue to manage rates successfully with positive average rates for the first nine months compared to last year. And we've prudently managed our balance sheet and are well positioned with ample liquidity and modest leverage to sustain our operations even in the most difficult environments. Now, please turn to Slide number 4. Our weekly fleet on rent and equipment rental revenue increased sequentially from the trough in mid-April through the end of September. Our focus on many of the cost-savings initiatives that were introduced last year continued to contribute to our bottom line in the third quarter and we continue to improve our transportation revenue recovery and controlled variable costs. We also generated approximately $252 million in free cash flow year-to-date and increased our liquidity to $1.4 billion by the end of the third quarter. With better than anticipated Q3 results, we raised our fiscal year 2020 estimates for the full year, which Mark Irion will discuss in a few minutes. Now, please turn to Slide number 5 for a brief overview of our third quarter financial results. We continue to experience the normal seasonal cadence coming off a low base due to the COVID-19 shutdowns in the second quarter. Equipment rental revenue was $402.3 million in the third quarter, and despite a decline of 12.5% or $57.3 million compared to the prior year, our volume improved sequentially throughout the period. Total revenues in the third quarter were $456.7 million, 10.1% or $51.4 million lower than the prior year, primarily due to lower rental revenue. Adjusted EBITDA was $196.7 million, an improvement from the second quarter, but a decline of 6.1% compared to the prior year. We very successfully managed costs and despite the decline in revenue, we delivered an adjusted EBITDA margin of 43.1% in the third quarter, an improvement of 190 basis points over the prior year’s 41.2% margin as we continue to close the gap with our largest peers. We also reported a substantial increase in net income to $39.9 million, or $1.35 per diluted share in the third quarter of 2020, compared to $9.4 million, or $0.32 per diluted share in 2019. Now, I'm going to turn it over to Aaron and ask him to pick up from here to discuss in more detail our third quarter performance and the current environment.

Thank you, Larry. Our ability to manage our operations and sales in this operating environment highlights the traction of our business strategy and the experience of our operations team. We've been through downturns before, but this year has been a true test of our operating model and the resiliency of our team. Before I start my discussion of our results, I would like to take this opportunity to thank all of our team members who have continued to effectively serve our customers in this challenging environment, and we greatly appreciate all that they do every single day. Great job, team Herc. Now, please turn to Slide 7. Volumes improved each week and we began to see the more typical seasonal cadence of activity in the third quarter. We have made great strides in diversifying the customers and business segments we serve. Our diversification initiative was put in place to help offset seasonal and or severe economic events. This year that strategy paid off as our growing specialty business, particularly our emergency response initiatives helped mitigate some of the impact of COVID-19 business slow down on the general economy. The expansion of our business in the climate and remediation sectors, as well as other targeted industry verticals helped offset the downturn in rental revenue experienced in non-residential construction and government spending. In September, we responded to the needs of our customers in dealing with the damage sustained by hurricanes Laura and Sally in the Gulf region, which contributed to our improved fleet on rent in the quarter. And at the end of the third quarter, our ProSolutions team was there to serve and assist as soon as the storms passed, and the floodwaters receded. Recently, I visited our team in Lake Charles, Louisiana, and was so proud to be associated with the tremendous response our local employees and Herc employees from markets all through the U.S. accomplished as they descended to the local market to help the communities in and around Lake Charles. Our ProSolutions team delivered strong growth in rental revenue in the third quarter and recorded a 14% increase compared to the prior year. Our team is available 24/7, and they are quick to respond to the needs of our customers throughout North America. Our sales organization has stayed focused in a difficult environment, reaching out to current and potential customers in person and remotely. We partner with our customers by delivering reliable equipment, service and solutions to assist them in operating efficiently and profitably. Despite the overall economic slowdown in activity, we are encouraged that our new account revenue as a percent of rental revenue remained in the double-digit range. Now please turn to Slide 8. As a provider of essential services, our core operations remained open throughout this pandemic to serve and support customers. We remain focused on our customers' needs and continue to adhere to the CDC guidelines. We're pleased with how well our team has adjusted to these additional safety considerations. While balancing the impact of practicing new health and safety standards, our team continues to deliver outstanding cost savings during the quarter. We remain committed to keeping our team, their families, our customers, and our communities safe. And while we enhanced our operational and safety procedures to operate in this challenging environment, all of our regions reported at least 88% 'perfect days' for the nine months of 2020. Through an acceleration of cost initiatives introduced in 2019, we continue to improve adjusted EBITDA margins as we focused on ancillary revenues and the management of variable costs. Please turn to Slide 9. We have a strong footprint across North America and continue to further our growth through the openings of new Greenfield locations and the addition of select fleet in high growth regions of the country. We operate 270 locations across North America, and 39 states and 5 provinces. This year, we've opened new locations in Fort Lauderdale, Toronto, Denver, and two in Dallas. Our goal was to open 6 to 10 locations this year, and depending on the timing of certain city permitting approvals, we expect to fall within that range. We tend to continue to grow with new locations and other high growth urban markets for the rest of the year and into 2021.

Thanks, Aaron, and good morning everyone. We were very pleased with our performance in the third quarter, as we continue to demonstrate that we have a business of scale and a resilient business model that is less volatile than many other industries in this challenging operating environment. Our results exceeded our expectations and the assumptions we use for full-year guidance. We've been really focused on margin improvement over the last couple of years. And I'm pleased with how quickly we were able to adjust to the COVID-19 shutdowns by accelerating initiatives that were already in place, managing variable expenses, as well as other cost saving measures to contribute to our margin improvement. Slide 14 shows the financial summary of our third quarter in nine months 2020 results. Equipment rental revenue declined 12.5% from $459.6 million to $402.3 million in the third quarter of 2020. The trends improved throughout the quarter with rental revenues improving sequentially each month. We will cover some of the rental revenue drivers in the next slide. Total revenues declined to $456.7 million, primarily due to lower rental revenue. Sales of rental equipment in the third quarter were $9.9 million higher than last year, as used equipment markets began to stabilize and we focused on tightening up the fleet. We reported net income of $39.9 million or $1.35 per diluted share in the third quarter. Our adjusted net income in the third quarter of 2020 was $39.8 million or $1.35 per diluted share, compared with net income of $43.2 million or $1.48 per diluted share last year. More details regarding our income bridge, and the non-GAAP reconciliations are included in our appendix. Adjusted EBITDA in the third quarter of 2020 declined 6.1% or $12.7 million to $196.7 million over the same period in 2019. Despite lower year-over-year rental volumes in the third quarter, our aggressive management of costs led to a continued improvement in our operating margins. Adjusted EBITDA margin improved to 190 basis points year-over-year to 43.1% in the third quarter, and a 250 basis points sequential improvement from the second quarter of 2020. REBITDA was $195.9 million and the REBITDA margin improved by 340 basis points to 48.3% during the third quarter. As a result of our management of cost, decremental margin flow-through was only 20.9% in the third quarter.

Our first question comes from Jerry Revich with Goldman Sachs. Please go ahead.

Hi, good morning, everyone.

Good morning, Jerry.

Good morning.

I'm really pleasantly surprised by the fleet on rent progress that you made over the course of the quarter and the outlook for the fourth quarter which looks like it implies a sequential increase in fleet on rent that is better than normal seasonality. I'm wondering if you could just talk about which end markets are driving that sequential improvement into the fourth quarter and the trend that's obviously better than we normally see in the fourth quarter.

Hi Jerry, this is Aaron. In the third quarter, what drove that was just a stronger comeback to the non-residential commercial markets that we participate in, as well as the markets for emergency response, such as down the hurricanes. And those were the bigger drivers. We also saw just our industrial manufacturing segment start to pick back up as we mentioned, it was starting to close the gap on pre-COVID levels.

In the fourth quarter, so it looks like here, based on the year-over-year comments you made on fleet on rent, you're looking for sequential increases in fleet on rent for Q4 versus Q3, which is very good versus normal seasonality. Can you comment on what's driving improvements into the fourth quarter?

Yeah, the same two of the three are growing specialty business. The commercial markets still are trying their best to improve. We're participating in that. And we see our industrial manufacturing, you know, come back to emergency response piece that probably won't repeat, but we do see the fourth quarter, as long as there's no other COVID impacts or shutdowns of cities, etc., we continue to see improvement in the fourth quarter.

Yeah, Jerry, we're also seeing, you know, a slow beginning of improvement in our entertainment, especially the primarily TV and film as that slowly comes back as those content producers get back to business.

I think we all look forward to that content coming back. And in terms of the EBITDA guidance for the fourth quarter, you know, your margin execution has been really outstanding this year, and I think the guidance points to margin compression in the fourth quarter compared to normal seasonality. And I'm just wondering is that just because we're so early in the cycle or if there are a lot of uncertainties or do you have any costs that are coming back? Can you just give us a bit more context there?

I mean, I think Q3 is typically the seasonal peak in margin as it is in rental revenues and rental volume. We are looking to see some losses on equipment sales in Q4, which will have an impact on Q4 EBITDA margins. And other than that, I think conservative forecasting the environment is still – it's becoming clear, but it's still a little bit cloudy out there as to which way things are going to go.

Okay, I appreciate the color. Thank you.

Thank you, Jerry.

Thanks, Jerry.

Good morning, everyone. Thanks for taking a question here. So, I just kind of want to follow up on the fleet discussion. If my math is right, then fleet ending OEC is down, call it 5.5% versus the prior year exiting the third quarter, and you know, you're also saying here that you're going to further tap the auction channel and sell a little more equipment in Q4, so in theory that should put pressure on fleet yet again. So, if I'm thinking about that, and then I'm looking at your comment that the guidance is embedding a fleet on rent decline of 4% to 6%, should we interpret all of this as utilization being flat to up year-over-year in the fourth quarter?

We don't really guide to utilization or time utilization. I think the best way to phrase it is, you know, we've seen a massive whack to rental demand in Q2; we're still working on catching back up to year-over-year levels in Q3 and Q4. So, closing that gap, but there is still a gap. And within that, there's room to adjust our fleet. So, I think running a reduced fleet size in the current environment is completely appropriate. We typically take down fleet in Q4 in any sort of normal year. And we're sort of just working our way back to that normal fleet management in Q4 of this year.

Right. And I understand you don't guide to utilization? It's just that that's sort of to me what the numbers would imply, and really, the essence of my question is more along the lines of equipment supply and demand versus where you see current market levels of market activity. And frankly, what that implies on a go-forward basis in terms of equipment and investment beyond the fourth quarter? So that's really kind of what I'm trying to get at. I'd appreciate some color there, if you could.

Yes. So, we are looking to close the gap to 2019 as fast as possible. We're looking to increase our rental fleet on rent. The actual size of the fleet doesn't necessarily control that. So, we can increase volume and take the fleet size down. We're seeing 2021. I mean, you look at the macro, the macro stats are looking flattish for 2020. We're looking – we're probably going into 2021, you know, relatively balanced in terms of our CapEx, sort of expectations and we can adjust that as necessary. So, you know, if we go on with a small fleet, we can adjust to the actual demand that we see as that shows up during the year and react accordingly.

Understood. And my last question, since you brought up that Slide 18, you know, I understand that these forecasts that you have on the slide are not yours, they’re sourced from third parties, but if you kind of think about the industry, if, say for instance, the non-residential building starts forecast for 2021 is correct, and industrial is obviously recovering, should the North American equipment rental market be flat in 2021 versus 2020? How do you think about the moving pieces there?

Yeah, I'm not really that good an economist to be able to sort of put it together myself. I think, you know, there has been a big impact to the U.S. economy this year, for sure. That's going to have an impact on 2021 that we really don't know. I think our end markets are probably more resilient and in better shape than a lot of the end markets, but as I said, you know, I think we'll just position our fleet, you know, as normal in Q4, and we'll be ready to react to the activity that we see in 2021. I don't think it's going to be a bad year. There are going to be challenges and there are certainly going to be opportunities in certain end markets.

Alright. Thank you.

Our next question comes from Ross Gilardi with Bank of America. Please go ahead.

Thanks, guys. Good morning.

Hey, Ross.

Good morning, Ross. How are you doing?

It's been great. Thank you. I just wanted to ask you, I think I asked a similar question last quarter, just with Q4 your fleet on rent down 4% to 6% in Q4 and your rental revenue down 6% to 8%, is the delta more rental rate erosion or are those mixed or other impacts? Can you elaborate on that?

Yeah, I would say it's more mix and other impacts rather than rate, where we're seeing positive movement in rate and will continue to drive rate, you know, as aggressively as we have been over the last, you know, 16 quarters or 20 quarters. So, I think it's more the other areas.

Got it. And then, your SG&A like, where do you exit the year on a quarterly basis because as some of the other questions alluded to, rental revenue certainly seems very strong into Q4. It's not a little bit counter seasonally positive, but if my math is correct, I think you've still got EBITDA down like 20% at the mid-range on a year-on-year basis in the fourth quarter, is most of that just SG&A coming back in the business? And whatever you do in Q4, should we view that as sort of an appropriate run rate for 2021 at this point?

Well, I'll let Mark comment to the specifics. But, you know, we are having people back out, traveling back seeing customers, you know, more things are happening. So, it's natural to assume that, you know, our SG&A will – you know, costs will pick up. You know, same with the OE. You know, as we, you know, begin to ship more gear, as we begin to, you know, utilize the different types of services that maybe we were able to contain completely, you know, during the high peak of COVID. But as we return to normalcy, I would expect, you know, some of those categories to also return to, you know, more normal levels. That said, we've been able to, you know, sort of figure out some new things, adjust our business model, learn some new ways to contain cost, and we'll expect to continue focusing on those new methodologies to keep costs down. But, Mark, you may want to comment on specifics.

I think, I mean, there will be some costs coming back as the volume increases. We are focused on margin improvement, and I think you'll continue to see margin improvement as a result of that. So, some of these cost changes are permanent and are just utilizing operating leverage as our revenue base comes back. So, you know, we'll look to give you 100 basis points to 200 basis points of REBITDA improvement over the next couple of years. It's going to be a little bit challenging to sort of keep on running at this sort of plus 300 basis point pace. But we will continue to sort of, you know, look for 100 basis points to 200 basis points each year.

Got it. Thanks, Mark. And then, just lastly, can you guys elaborate a little more on the ProSolutions, up 14%. You know, that's obviously pretty impressive in this environment and the number looks like if you maybe stripped out the emergency response tied to COVID, you know, the hurricanes?

Well, we've invested in the ProSolutions business for the last four years with fleet, footprint across North America, opening up new locations, adding in, you know, technical expertise and professional salespeople into the business. So, we've invested more rapidly than our traditional business, so, you know, we do have expectations for it to continue to grow faster than the rest of our business. And I think this year, that model is proven out, and anytime there is an emergency disaster, like we saw with the hurricanes, you know, they do have relationships where they can move in and really solve the problems of those communities pretty quickly. And so, we like that part of our business very much.

Is your CapEx in that part of the business actually trending up yet at this point? And it would certainly seem given the growth there that's probably on the rise and I was wondering if you agree with that and what types of equipment would that entail if that was the case?

So that's true, and we gathered together when the COVID situation began. And in March, we decided, you know, where should we reduce our CapEx and where should we not and we did not pull back on our ProSolutions CapEx.

Good morning.

Good morning, Brian.

Look, another great quarter. I'm just curious about the visibility you have on the entertainment business and to the extent that you can – if you can kind of dimension what you expect to come back and what still, whether it's the festivals or things like that would still potentially be a concern for 2021?

You know, look, I think our visibility on TV and film is pretty good in terms of what we see coming back and where that's coming back in the, what I'll call the pure entertainment area, you know, live events. You know, that's probably a little more cloudy at this point and no certainty as to when that might come back, you know, in terms of any great strength, until, you know, we have more visibility on, you know, the pandemic, and that – you know, that diminishing or there being some kinds of vaccines. But, you know, you can just watch on sports and things that you're watching on TV. You know, there are not many people at these venues today, so that's a little more cloudy. But TV and film is slowly coming back. Aaron, any more color on that?

Yes. During the five months after, you know, the COVID began, they went from growing pretty well to zero. And in the month of September, we started to come back to life, as we said, you know, maybe it's 25% or 30% of normal. But we believe from talking with our teams that it'll continue to pick up pace, and maybe sometime in the first quarter, if nothing else comes along that disrupts business, we'll be getting a lot closer to what it was. On the live event business, I think there might be a slower turn. That's – you know, we kind of divide our entertainment into film, TV, and commercials, and then, live events. So, live events, we'll have to wait and see. I know there's things being planned for next year and our customers are talking about needing equipment, but we'll have to see if how much of that materializes.

Thank you. That's really helpful. And this is about a low-to-mid single digit business when it's normalized as a percentage of your total revenue?

Yes, that's correct. Yes.

Good morning.

Good morning, Steve.

I guess, yes, to start with on the unique factors for Q3 results, like energy, hurricane, and then entertainment coming back online. If you add those up, you know, what did rental revenue do maybe excluding those items?

I think that's a little bit granular for us to really be able to respond to it. I mean, as Aaron alluded to, the entertainment business was coming off at zero. So that might have, you know, had a better percentage increase. But I think, just in general, those – you know, the economy was shut down and the economy is reopened, so most of the end-markets grew at a similar sort of pace outside of maybe the entertainment and film, which was really locked down.

And to give you a little bit more color on the number, our revenue attributed to the hurricanes and the fires was only about 1% of our third quarter revenue.

Got you. Okay. And I guess, maybe thinking how some of these, you know, unique factors of hurricane and entertainment coming back online, how does maybe that carry over for Q1? You know, I know there's generally a sequential decline from Q4 into Q1, but given this is an odd year and those starting to come back, will that seasonality change much from Q4 into Q1?

I mean, I think we'll see the normal seasonality. You know, it's been an unusual year, but there's still going to be a winter, so it'll drift off towards the end of Q4, as it normally does, and continue to sort of, you know, drift down into January and start picking up again, you know, in March, April. The question or the real – you start to see the real impact or the real strength of 2021 into that sort of spring season, and we'll be, you know, working our way through the winter, and keeping a keen eye on just activity sort of kicking back into the spring.

Great. And then, last question from me on pricing specifically for the entertainment market, as that business comes back on, is pricing similar to what it was pre-pandemic as you put that fleet back out for rent?

Yes. I think you can see from our results in the third quarter, with all the businesses coming back in that pricing is being relatively stable.

Thank you. Congrats, guys on just a strong year-to-date performance despite everything that's been going on. Just one question for me, when you look at kind of the change in revenue in Q3, I imagine you have a better handle of it versus what you saw on in Q2, but if you just looked at kind of like the industrial and the non-res customer activity, how would you describe, you know, the breakdown in revenue? Is it projects that are delayed? Is it projects that are cancelled? Is it limitations in terms of the capacity in which these customers can act? I'm just trying to understand the composition of the revenue decline that you guys are seeing in the business kind of more of – you know, how and the tangibility of how it's developed?

Sure. John, this is Aaron. To break it down a little bit, on the industrial side of the business, we've seen projects delay early on, right after March, and now coming back, we believe that that work has to get done. So whatever doesn't get done this year, it will probably happen next year. We've seen some industrial projects actually get delayed indefinitely. We read one yesterday that was related to the vaccine, and, you know, the pandemic, and they were just delaying indefinitely. But on the commercial side, we've seen our national customers on the non-res commercial side hold up better than our local customer business. And the way I would describe the non-res commercial business is just the projects that were in place are coming back and they're going back to work, and, you know, we'll see next year what the pipeline really looks like. But, you know, they're just getting back to work on the non-res side. On the industrial side, they're delaying more or less, but as we get into the latter parts of the third quarter of 2020 and fourth quarter, we're seeing them – those delays actually starting to kick back in.

And there is some impact relative to the availability of workers, of construction workers, of trade, skilled trade, you know, as a result of the pandemic, with, you know, there being, you know, breakouts and things like that on various projects that has certainly impacted, you know, numerous projects across the nation. So, I think that's, you know, part of the delay and part of the issue relative to that returning more quickly.

Hey, good morning, everybody.

Hey.

Good morning. I guess maybe for Mark, in the fleet ages up to 47 months, I think it was up from 44, and can you just talk about, you know, your ability to continue to sweat those fleets further? At what point does repair maintenance become prohibitively expensive? Or, you know, how much more room do you feel like you have to sweat the fleet? Thanks.

That might be better suited for Aaron, but I’m fine with managing the fleet. The maintenance expenses are not typically excessive. We've extended the intervals to 51, 53, and even 55 months in other fleets. The incremental maintenance costs are minimal, generally around 1% to 2%, which doesn’t significantly impact replacement capital. The quality and longevity of the fleet have improved more than ever. The rental period represents about 30% of the fleet’s total lifespan, meaning that once we sell it, there are likely two additional owners afterward. We're adaptable to market conditions, and typically, downturns last no longer than two years. This one appears to be brief and sharp. A fleet age of 44 months is not an issue, and we'll remain flexible moving forward. Ultimately, fleet age is not a concern; the main challenges arise from the economic environment we face.

Okay. So, you wouldn't be opposed to pushing it back into the low 50s. Is that what you're saying?

Not at all. But Aaron can jump in somewhere along the way here.

Yes, I wouldn't be worried about extending to 51 or 53 months if necessary. However, our fleet is quite different now compared to 8 or 10 years ago. The specialty business has a much longer fleet life, so the averages appear different, but I wouldn't be concerned about 51 to 53 months.

All that said, you know, our preference would be let's see where this downturn is. If we see an end to it, we'll bring the age of the fleet back down again, you know, methodically over a period of time to make sure that if we encounter another downturn, we'd be able to sweat the fleet again.

Okay. That's helpful. And then, I guess, just, you know, the follow-up to that would be, you know, you're kind of entering the time of year when you start to have your negotiations with the OEMs. Is it fair to think that you might be more cautious even in your discussions initially, you know, to start on how you're thinking about CapEx for 2021 and just sort of, you know, relative to the traditional cycles or traditional years, you might hold off on putting orders in until you have better line of sight so maybe that happens early next year instead of late 2020?

Well, look, I think it’s a little early in the game for us to really sort of comment on next year's capital. But, you know, I think we do have some categories that we'll get a jump on where we know we'll have the opportunity, and, you know, I think most of the manufacturers, with their ability to respond quickly, would be readily available to supply gear when and where needed.

Hey, good morning, everybody. Can you hear me now?

Yes. Hi, Rob.

Yes. Hi, Rob.

Hey. So obviously, really excellent results on cost control and management in general. Just a couple of questions on that, I know you've gone into it. But did you pull any levers more, you know, this quarter, you know, maybe in the SG&A line? We could see some in the rest of the business. And then, if we look at the SG&A line, how much of that save should we expect to sort of endure permanently versus bouncing back up and you find deficiencies from operations in the rest of the cost structure?

I mean, it's a little bit hard to sort of get too granular on it. There were – you know, in Q2 and Q3, there were some really unusual SG&A savings, just given the amount of the shutdowns. So it is going to come back a little bit. I think you could probably run it at the same percentage of rental revenues going forward. So, you know, we'll continue to try and lock down the margin impact, but on an absolute basis, you know, there will be costs coming back into the businesses as the volume improves.

Okay, perfect. And what about the rest of the cost structure? I mean, is there a lot of extraordinary stuff in there driving this kind of margin gain? And pricing wasn't a help. It has been for you, you know, obviously, it will be again, and your margins are great. So, just a little bit of a question of its maturation of all the efforts you have been doing versus, you know, crisis related. But anyway, thanks for the answers.

Yeah, no, you got it. And I think, I mean margin, you will see margin improvement or we are definitely focused on continuing margin improvement in 2021 and 2022 after this sort of 2020 levels that you're seeing.

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