Well, Aaron, Mark, Leslie, thank you very much for joining us today. Thank you, Jerry. So Aaron is going to spend a few minutes on slides, and then we'll jump into the fireside chat discussion. Aaron, please, the floor is yours.

We'll just run through a few slides here. Here's our typical safe harbor statement and non-GAAP financial measures. I'm going to take you guys through a few slides just to make sure you all know who Herc is, Herc Reynolds. This is our vision, mission, and value statement, and we pledge, all of our employees pledge to equip our customers and communities to build a brighter future. You may or may not know, but HIRC's been around for 60 years. We've been public for a little over 10 years. We have almost 10,000 team members, and we operate out of 600 locations in North America. our addressable markets almost 90 billion dollars and what's nice about it is that it continuously has a growth fundamentals in it good some good secular trail tailwinds there we operate out of a set of core strengths and differentiate us in a highly fragmented industry which puts us in a really stronger position today we have technology we have a diversified fleet and so we execute in different facets of different end markets in a pretty exciting industry. We've been a market consolidator for five years. We've done over 50 acquisitions in that time and then most recently last year did a very large acquisition called H&E Equipment Services. They were based in Baton Rouge and had 162 locations. Really fundamentally changed our footprint. Scale is really important in our business. And so we picked up 162 new locations, as I mentioned, and about 2,500 team members. We got 30% bigger with the acquisition, so 30% more fleet, 30% more locations. Our sales force, which is maturing, got 30% larger as well. We've spent the last half of the last year, after the acquisition, just building our foundation, going through exercises to optimize the fleet and integrate our teams, get all of our systems in place. We got that done and as we exited Q1, we were fully integrated. So the way we look at 2026 is that we've built this new foundation of a business that's 30% larger and now we're ready to get the flywheel going in the back half of this year, which also will give us the energy and the flywheel going into 2027. Just a little bit more about Herc here. So, you know, our basic fundamentals are about growing the core of the business, especially which I'm sure we'll talk about in some Q&A is really important to this business. And technology is becoming more and more of an important ingredient for success in this industry. I'm sure there'll be some questions about that. And the way we allocate capital, right? We're a growth company. We invest to grow the business, but we do it in a disciplined way. We do pay a dividend. We'll continue that going, you know, for the future is the way we see it. So, Larry, Jerry, with that, I'll pass it on to you, and thank you.

Well, thank you, Aaron. Super. You know, maybe we'll just pick up where you left off. Just looking back at your 2023 Analyst Day, you folks spoke about growing the core, expanding in specialty, driving a bigger mode in tech. Where do we sit today relative to your targets from the time on those three initiatives? And can you talk about any pivot in the strategy from here, given the H&E integration, which obviously wasn't contemplated in 23?

Yeah, I think we've checked the box on all three of those items, right, that we said we were going to do. Maybe not necessarily in the same way we thought it was going to happen, because, you know, every year the industry is changing a bit. but back in 2023 when we had the investor day we had about 330 locations and now we have well over 600 so we did that through doing greenfield locations about 20 a year and then also just our tuck in m a strategy and then when the h e acquisition opportunity came in that really propelled us forward so you know as we sit here today we we grew the core of the business um Our strategy has always been an urban market strategy to get more dense in the biggest MSAs in North America. So we've done that. From the technology point of view, we've done the same thing. So we're continuously investing in our technology. We have a customer-facing tool called ProControl. That is where our customers will go to manage their fleet, manage their purchase orders, see how much utilization they're getting on their assets. but it's also the place that our teams work with our customers on helping them be more efficient we've advanced our technology in the way we sell used equipment really important we brought the H&E team in and we got 30% bigger with Salesforce we already had the technology to help them go to market and sell in the way we want to sell which is through channels right we want to sell in the higher proceeds channels of retail and wholesale versus auction as much as possible. We use technology to manage all of our logistics in North America. Very, very important. And actually, we're going through another transformation on that now, just to take that to the next level. So technology is a key component. And the third piece again, so grow the core specialty.

Specialty.

Oh, especially. How can I forget about that? So when you go to market in the equipment rental industry, and you want to be a premium equipment rental company you have to have a specialty edge to your business we've developed that from a new business 10 years ago to a business of scale now so we have over 200 locations that are just specialty businesses 50 of those got open just because of the footprint with the H&E acquisition so we like where we are if you want to go into the mega project arena you have to have a specialty component that's your mission critical side that allows you to compete at a different level whether it's power generation climate control industrial pump these are the components that are really important so I think we check the

box on all three of those and then Aaron can we just double click on specialty can you just talk to us about what proportion of your specialty business is power versus HVAC versus pumps and I want to double click on the power side specifically because that's where we're seeing a lot of opportunities for folks Well, we don't break down publicly what piece goes into each one of those, Jerry.

But what I can tell you is that besides power, pump, and climate, the other components we call specialty is our trench business, as well as our industrial tool business. So those are our five flagships. And when we bought the H&E business, that was about 20% of our fleet. Well, once we closed that transaction, H&D didn't really have the specialty edge, which was what made them attractive to us because we could bring that into their business, and that's the value proposition, right? That's the revenue synergy. So that 20% went down to 16%, and now we're building that back. So I think what's interesting about Herc Rentals and specialty is that we're early into it. So all these five that I just mentioned, these have a lot more room for us to scale. The rental penetration in our industry in those areas are very, very low, a lot lower than your core categories of material handling and aerial. So a lot of opportunity for us.

And then in terms of thinking back to your prior disclosures before H&E, I think you folks had said that 80% of your specialty business was power and HVAC. Is it fair to say that that proportion is higher now? given the shortage of power in the industry? And can you rank order for us out of the product lines where you're seeing the strongest organic growth?

So the industry trends, power is very, very in demand. You read that with all types of companies' quarterly reports. So it is the same with us. We describe power as anything that's diesel or battery or air that can, you know, run manufacturing. So the diesel component is very popular because of the demand for AI, and battery has been a bigger position for us. A lot of our capital on the power side has gone to build out our fleet of large megawatt machines and battery power.

And to shift gears in terms of your first quarter performance, really strong dollar utilization acceleration. You folks were at the high end of the industry range, but everybody had dollar utilization improvement of at least the point versus normal seasonality. Can you talk about what clicked for the industry in the quarter that drove that inflection? Are we finally seeing pricing power?

You know, I think there's a couple of things to unpack there. I think, one, the industry has done a tremendous job of sort of fleet in and on, just remaining balanced. I think taking this back to sort of the slowing of the local markets in the middle part of 2024, I think it probably took the better part of three to four quarters to sort of get aligned and sort of being able to process that slowing of the local market. But, you know, the last 12 months or so, the industry on whole has been extremely disciplined with fleet in and on. And so I think, you know, as you sort of look at, you know, time utilization from an industry perspective year over year, that is certainly tightened, which I think is sort of driven the dollar utilization. I think for us sort of specifically, though, it's been there's a lot of self-help in what transpired in Q1 and what we anticipate to continue through, you know, two, three and four. And that was around our fleet optimization as we worked our way through the back half of 2025 with all of this new H&E gear, getting it right, getting it in the right places, and then layering in, you know, synergy fleet, specialty fleet, et cetera, enabled us to better attack 2026. And so I think, you know, as you sort of look at Q1 in particular, some of that self-help is starting to take place, you know, and I think that's sort of driving us to this sort of inflection point that we've talked about inside of Q2 where we're going to go from this negative growth pro forma to a positive and sort of shoots us into the back half of the year. And so I think, you know, you sort of pull it apart, Jerry, and you've got sort of the industry being disciplined on one hand, and then from us in particular, just the self-help component of this, you know, a more experienced sales force as we enter season, et cetera, will certainly help drive time utilization and ultimately dollar utilization.

And, Mark, so our field work on that front, so we heard from multiple folks that, you know, 2024, exiting the year, time you tied for the industry, that continued into 2025. And then pricing, we heard, really took off in March and April. So, you know, going from, you know, pretty minimal pricing to up about a point in March, point and a half in April, and, you know, another point in May. So really good acceleration now that utilization has improved.

Is that your take on the way this cycle is playing out?

What are your observations?

Maybe a little bit different take, Jerry. I think that, you know, on one hand, the industry has been quite disciplined in terms of the in and on that we just spoke about. But I think that, you know, in order to ultimately gain sort of significant pricing lift, I think we need to see sort of a re-emergence of the local market because I think there's there's still incremental fleet tightening that in that local market that needs to take place to sort of drive that sort of really incremental pricing lift and I think that you know as we sit here today we specifically Herc Rentals has talked about you know a muted local market and so I think that that's sort of the environment that we've been in. And I think it's the environment sort of given the interest rate outlook for the back half of 2026. My take on it would be that we'll see sort of continued, yes, we've got a really disciplined fleet on whole industry wise, but I think you're going to need to see a local market sort of resurgence to sort of get that ultimate pricing lift that we've seen historically.

And then in terms of the way the cycle played out last year, We didn't really get to see a normal pickup and rental rates seasonally over the course of construction season. Are we seeing that this year? Not beyond normal seasonality, but at least a half a point to a point a month that you normally see in a construction season. Are we back to normal season?

Yeah, I mean, I don't want to speculate necessarily on what will happen as we work our way through season. I would tell you, though, high level that where the where the fleet and the industry is placed sort of heading into season should dictate a better sort of performance year over year than 2025.

And then in terms of the type of equipment that's most in demand, can you spend a minute and unpack that? Where are you seeing the pockets of the most significant opportunity to push pricing? Which products stand out?

Well, you know, for us, since we did the acquisition in June, a lot of self-help fleet efficiency type exercises that we went through to get our fleet post the acquisition in the right spot. And we entered the year of 26 with fleet efficiency. So that's really important for us to have the lens on, hey, where is the pricing opportunities, right? But, you know, these mega projects drive a certain amount of demand for specific type of products. So, you know, whether you're talking, you know, power type products, unique aerial equipment with the right safety features that that space wants. You know, you're seeing those areas, kind of the tighter supply and demand economics going on right now. The core fleet, you know, aerial material handling, you know, compact earth, they really look normal. Okay, so it's not like there's not enough fleet in the market right now. So I think really what's going on is there's just good discipline going on in the industry to kind of make sure that we're supplying the right amount of gear for the right amount of demand that's in the marketplace right now.

Were you surprised Caterpillar was able to build dealer inventories for Earthmoving as much as they were in the first quarter? Is that concerning to you folks on the supply demand?

It's not something that we look at as an early indicator for our business. you know because cast number one primary objective is to sell gear and I know that during the last three years they were trying to they had too much inventory so they're trying to sell it down not just them but I would say you know anybody that was in the dealership network that's what they're trying to do so the fact that they have to kind of restock doesn't surprise me and then coming back to the fleet efficiency comments that you made Aaron in terms of driving that higher.

So before the acquisition, you know, H&E pricing was about seven points lower than yours. How long until we harmonize pricing? Where are we in that transition?

Yeah, great question, Jerry. I mean, I think, you know, if you think about that in a couple of different buckets, they had contract customers, which was probably about a third of the revenue base, and two-thirds of it was in the spot market. Really not too terribly different than the way that Herc Rentals looks on a day-to-day basis. And I think that given sort of where we are today, sort of the dis-synergies that we took on early, I think this is a three-year sort of lift. I think that the contract piece, we renegotiated all the contracts straight away, got some pricing lift there, But I think that, you know, there's an element of showing our value, the Herc Rentals value to those contract customers over a period of time and sort of lifting those rates up over that period of time. I think on the local side, the spot market side, if you will, you know, they're now in our technology stack. They're using our Optimus price tool. And so those guardrails that Herc Rentals is sort of always operated with, those are new sales folks are operating with those same guardrails today. But I think that back to my earlier commentary, I think that you're going to need to see sort of a lift and a resurgence in the local market to sort of drive that pricing lift in totality. And so I think as you're thinking about this, I think it's a three-year accomplishment as opposed to something of a shorter duration. I think it sort of happens naturally over the three-year period.

And when does the clock start, first quarter of 26 or May of 25?

Yeah, I mean, we obviously recognize, you know, approximately $40 million of REV synergies in totality in 2025. But, you know, in fairness, that was, you know, really one quarter in a consolidated, under a consolidated roof. And so, you know, in my view, it's sort of 26, 27, 28 is sort of the three-year run.

And then, Mark, you've spoken about dollar utilization trends improving over the course of the year. Can you talk about how much of a contribution you're expecting from time utilization? Because now that the business is integrated, you folks have a lot of fleet that you can put to work.

Yeah, no, I mean, I think that it's a great question. You know, we certainly are anticipating, expecting, you know, dollar-yield improvement as we work our way through from one into two and three and four. You know, those generally you can sort of flip a coin as to which one has the higher dollar utilization, generally speaking. And I think that should be the year that we experience this year. I think that the components of that are absolutely time you lift year over year. I mean, that comp gets a bit easier, quite honestly, as you sort of work your way through the back half of the year. Not to be understated, though, you know, the specialty piece of this and the investments on the specialty side, which sort of add, you know, 800 to 1,000 basis points of dollar utilization improvement. with these new 50 branches that we layered in in the back half of 4Q and into Q1. As those begin to mature and ramp, seasonally, we'll get some lift there, too. So I think it's really a combination of time mute and mix from the incremental specialty that we layer into the business.

And then you gentlemen spoke about the bifurcation between data center power versus local markets. One interesting megaproject vertical that's now inflecting is semiconductors and electronics. Can you talk about, do you have visibility on how much your fleet deployed towards that end market is down versus the 24 peak? Because thanks to work from our tech team, it looks like we're on our way back for CapEx back to 24 peak as early as next year. If that happens, Trish, trying to frame how much of a drawdown we've seen and what that move could mean.

Yeah, you know, the chip manufacturing has been something we've been watching for, you know, 15, 20 years, because typically when they build a chip plant, they don't usually stop, right? There's another phase and they continuously are doing improvements in those plants. When the CHIP Act came out, what was it, in 2020 or 2021, several chip manufacturing plants popped up pretty quickly, which those are large projects. You know, you're talking a $10 billion project, throw on a couple more phases, you know, it's a $20, $25 billion project. The only thing that has that type of scale is like an LNG plant. So that early wave after the CHIP Act, there was a lot of CHIP activity, a lot of growth, a lot of fleet went into those projects. And then as you illustrated, Jerry, they kind of came down, never completely came off. As I said, there's always works going on on those projects. So it came down and that fleet went into other opportunities that allowed us to really grow our urban market strategy in places like Phoenix and other places. Now you see the next wave of chip manufacturing coming out like in New York and another phase in Idaho, another one in Arizona. So, yeah, I think it's probably going to peak higher for Herc than it did the first time.

So you're already starting to see that? Very interesting. Yeah, the starts have just started to accelerate as well. And in terms of the type of equipment or the equipment intensity, when we're talking about building out more data centers, less warehouse. What does that mean for HIRC?

What do the data centers mean for HIRC?

Relative. So for a dollar in data center investment, it feels like there's more equipment intensity based on what we're seeing on sites versus if we're standing up a box for a warehouse with lower content.

But I'm curious how you folks think about it. So we use a metric. We use it across the board. two percent of the project value will be addressable to the rental market and we kind of use that as our our proxy to measure okay how much fleet is going to be deployed at that project etc a standard warehouse like a distribution center you know will be probably on the higher end but a data center a lot of that capital that they're deploying to the projects going to the gear that's going on inside there's also a lot of pressure on a data center project to get it done and get it fast and do it safely. There's a lot of people watching those projects as opposed to just a standard distribution center. So things happen quickly. I think there's a lot of money, you know, at play to get that thing up and running. So the pressure on a data center build, in my experience, has been greater than a distribution center build. But the equipment intensity is greater on a data center project. Per dollar. Yeah, because there's more mission-critical equipment going into there. because of the speed they want to go to market.

And so if I told you we're going to have 30% growth in SEMI's investment, 27 versus 26, 30% growth in data center demand and 10% to 20% in power and local markets flat, you'd be okay with that from a HERS standpoint?

Local market is the biggest part of the business. We'd like to see that cycle kick in.

We'd like those tailwinds. but you know I think a premium equipment rental company can grow in the current environment yes and then in terms of the type of equipment on sites I'm curious what you make of this we heard from the channel that there's a growing premium for late model year equipment and new equipment versus older because nobody wants a five-year-old boom on the data center side is that happening is that having an impact on use values?

I'll tell you, if there's 10 requests like, if there's 10 situations like that, maybe a third of them have that type of stringent demand, but it really doesn't have as much to do with the age of the equipment. It's the, they want the most current safety features available on the equipment. That's what it's about, safety.

Got it. And then, you know, to shift gears, just given the post-COVID undersupply, then oversupply, it's taken the industry longer to drive dollar-youth higher. There's concerns about competitive discipline market, equipment share, Caterpillar. You folks have been in the industry for a long time, not to age you. But can you talk about how you view competitive intensity today, especially given the Rouse data and consolidation on the one hand versus the accelerating penetration by equipment share and what CAT might do in this market?

Well, what we've seen over the last five to seven years it's just more consolidation of the industry it's still you know highly fragmented the the top three equipment rental players us being the third largest control about 35% of the market so still highly fragmented and because of that the the professionalism the discipline has increased right so that's a good thing there's always you know new entrance into the the space and the companies you mentioned you know they've been around for doing this for a number of years too so um i think they both have you know uh ambitious goals but we haven't seen much change so where you see sometimes there's strengths in certain regional areas and they were always stronger and they continue to be and um by and vice versa so not a ton of you know significant change in the landscape it's just i think the professionalism and the discipline continues to improve and would that view change if cat were to buy genie well we don't today we don't buy product from cat so that would be something that could change yeah we'll see okay um in terms of capital allocation you've been very clear mark the focus is to get leverage back down once you're

back in that two to three turns of leverage what what's the hurt capital deployment playbook any different from what we've seen before the hne deal yeah i don't think so i mean i think i think you said it right i mean our focus today is is to get back inside of that um you know two to three times leverage ratio uh upper end by the end of of 2027 and then i think you know from there um it'll probably look uh very similar to the way that it it used to look um you know i think that we'll you know, turn back on, you know, Greenfield's, you know, tuck in M&A. But again, I think we, you know, we've said all along that we'll evaluate, you know, any and all deal. And I don't think any of that changes. I think that, you know, what we acquired in June of 2025 deserves requisite attention from us at this point in time. And then I think, you know, as we sort of execute uh in and through that acquisition um you know we'll probably turn back on uh those same faucets that we're on before um you know greenfields and tuck in m&a and continuing to do that in a manner that sort of continues to build scale inside of the top 100 markets i would add that we're obviously a growth company so the way we deploy our capital first and foremost is into our fleet to grow the business.

And with the H&E acquisition, we have a whole new platform to build diversification and drive our synergies as well as our specialty business. So first place we'll go is investing with fleet in a reasonable, disciplined way.

And then in terms of on the technology side, you folks have had really strong logistics performance. Obviously, H&E throws that off over the past year and a half, but your fleet on available performance has been really good. Are you folks doing anything interesting with a growing set of data from telematics, any AI initiatives to allow you to drive time utilization maybe even higher than you have historically?

Yeah, you know, we're always focused. We have a great IT team. We're always focused on driving efficiency through technology. We got great business intelligence tools that all of our sales professionals and our management teams utilize to do a better job every single day. And along comes some opportunities, right? We got a lot bigger with the H&E business, and we had some quick synergy wins with bringing them in with our logistics because our markets got denser. So we could drive and utilize the assets, the trucks that we use to deliver gear much more efficiently, but also got a lot more complex. So the dynamics of raising fuel prices and how that impacts a bigger entity, these are the things that get a little bit more complex and dynamic. So we're embarking on a whole new logistics transformation to drive more and more efficiencies in our larger scale business. And then along comes, you know, AI and the way we're using AI today opens up a lot more opportunities for a lot of things. I'll name a few. One would be when equipment goes on rent and it comes back, you have to know what kind of condition it went in. And we're now deploying AI to measure any change in that so that it takes some of the human factor out. And we could be more efficient with making sure equipment stays, you know, to the standards we expect with the quality of equipment. um we're using ai and safety already we've deployed um 7 000 uh two-way facing cameras in all of our vehicles on the road that our employees drive every day and ai is helping our drivers be more safe so we're you know a safer operator on the road and then you know the one of the things i'm most excited about is the way our our team is deploying ai so you know we're now deploying it, you know, the tools across the organization, but in the way that HIRC feels is responsible. So our IT team has created our own HIRC GPT. And so our team members across the network are using it in ways to make their jobs more efficiently. One thing I'm excited about is what it can do for predictive fleet demand and help our fleet planning processes across our organization. I think that's something that over the next 30 days we'll get deeper into and be able to have something workable as we go into 2027 and her GPT has a nice ring to it I'm assuming you're using chat GPT from back end or using cloud or it's it's it's designed kind of proprietary with our own IT team it's not just the the chat GPT it's not that it's just a kind of play on words combination actually yeah got it so go chat you detect with your reams of data it allows our teams to go use whatever ai tool they need to use that fits best to what function they're operating in and to do it also in an

economical way and a secure way i mean i think that's the other piece here too is that you know you know publicly facing data we have to ensure you know is is safe and so we've we've sort of design this in a manner that allows our employees to be secure while also being more efficient.

And in terms of monitoring conditions, really interesting. How much of an improvement are you seeing in labor hours? How much of improvement are you seeing in terms of days reduction to turn equipment in the pilots that you run? What's that look like?

Well, one of the pilots I mentioned is the photo compliance with the damages. So incredible. When we started, the compliance was like 10%. You bring this AI tool in and you get the organization kind of rallying around it and the pilots and you quickly get, we got to 90%. So now it's at the point where we can start to deploy it across the regionals and then across the organization. And, you know, there's a financial implication to that. That benefits your P&O when you can control those kind of costs better.

That's all the time we have. Please join me in thanking Aaron, Mark, and Leslie for supporting our conference. Thank you very much.