Hero Acquisitions Limited (subsidiary of HSS Hire Group plc) Q3 17 - PowerPoint PPT Presentation

Hero Acquisitions Limited (subsidiary of HSS Hire Group plc) Q3 17 Results

Agenda Hero Acquisitions Limited – Q3 17 Steve Ashmore, CEO John Gill, CEO Strategic progress Headlines Steve Bailey, Interim CFO Paul Quested, CFO Q3 17 Results H1 results Steve Ashmore, CEO John Gill, CEO Summary Outlook 2

Decisive actions returning Group to profitability in Q3 17 Headlines � Q3 17 profit ahead of H1 17 � Adjusted EBITDA of £18.0m (H1 17 £17.3m) Hero Acquisitions Limited – Q3 17 � Adjusted EBITA profit of £6.7m (H1 17 loss of £7.1m) Q3 17 Results � Underlying revenue growth through sales initiatives � Underlying rental revenue flat in Q3 17 vs prior year, H1 17 was a 3% decline Outlook � Services revenue growth of +12% with improving margins; contribution +23% � Delivered annualised cost savings of £13m, realised £3m in Q3 17 Q&A � Net debt reduction remains a key focus and continues to reduce � Net external debt £8m lower than prior year at £232.1m (Q3 16 £240.4m) Appendix � Facility and cash headroom in excess of £33m (Q3 16 £15m headroom) 3

Improved EBITDA performance EBITDA by quarter Headlines Hero Acquisitions Limited – Q3 17 25 Q3 17 Results 20 20.4 18.0 17.8 15 14.7 £m 10 Outlook 8.8 8.5 5 Q&A 16A 17A Appendix Q1 17A Q2 17A Q3 17A (£m) EBITA (4.4) (2.7) 6.7 4

Q3 17 EBITA profit compared to H1 17 loss 13 13 26 27 Headlines weeks weeks weeks weeks £m Q3 17 Q3 16 Q3 H1 17 H1 16 H1 Hero Acquisitions Limited – Q3 17 Growth % Growth % Revenue 89.6 89.8 160.5 166.2 Q3 17 Results (0.2%) (3%) Adj. EBITDA 1 18.0 20.4 17.3 32.5 (12%) (47%) Adj. EBITDA margin 20.1% 22.7% 10.8% 19.5% Outlook Adj. EBITA 2 6.7 8.3 (19%) (7.1) 9.8 9.2% Adj. EBITA margin 7.5% (4.4%) 5.9% Q&A Exceptional costs 3 3.4 5.5 12.6 7.0 Appendix 1 Earnings stated before interest, tax, depreciation and amortisation (“EBITDA”) and before exceptional items 2 Adjusted EBITDA less depreciation 3 Exceptional costs reflect impact of branch and office closures and associated fixed asset impairments, implementation of cost reduction programme and preparatory refinancing costs 5

Segmental analysis Rental Q3 performance demonstrates a significant step change on H1 Headlines • Underlying rental £m Q3 Q3 Q3 H1 H1 H1 revenue flat in Q3 17 16 Growth 17 16 Growth Hero Acquisitions Limited – Q3 17 2017 1 Rental (and related revenue) • Contribution down Q3 17 Results 3.8pp driven by Revenue 65.4 68.1 119.3 128.7 (4%) (7%) network costs (2pp) and sales, product Contribution 44.0 48.4 73.9 86.7 (9%) (15%) and customer mix Contribution margin 67.3% 71.1% 61.9% 67.4% (1.8pp) Outlook Services Services • Improving Revenue 24.2 21.7 12% 41.3 37.5 10% contribution through Contribution 3.2 2.6 5.2 5.2 revenue growth and 23% 0% profit improvement Q&A Contribution margin 13.2% 12.0% 12.6% 13.9% plan Branch and selling costs (20.2) (22.7) (41.3) (45.5) Costs Appendix Central costs (9.0) (7.8) (20.5) (13.9) • Cost reduction initiatives delivered Adj. EBITDA 18.0 20.4 17.3 32.5 (12%) (47%) £3m savings against Q1 2017 run rate 1 Underlying revenue is total rental revenue adjusted for branch closures, asset disposals in Q4 2016 and cooling product seasonality 6

Recovery in underlying Rental revenue Driving rental revenue Underlying Rental revenue trend improving Headlines � Sales initiatives driving improved Hero Acquisitions Limited – Q3 17 5.0% performance Q3 17 Results � Focus on Rental revenue across the 0.0% whole organisation through aligned incentives Outlook � Improved availability and service (5.0%) fulfilment supporting growth Q&A � Asset utilisation in Q3 of 55% in Core (10.0%) and 76% in Specialist business Appendix � Targeted investment for high demand (15.0%) Q1 Q2 Q3 and highly utilised assets Underlying core Rental revenue (1) Reported core Rental revenue 7 (1) Underlying revenue is total rental revenue adjusted for branch closures, asset disposals in Q4 2016 and cooling product seasonality

Costs reduced through cost actions taken Cost actions implemented Breakdown of cost actions implemented Headlines � Efficiency through network e.g Hero Acquisitions Limited – Q3 17 7 distribution routing Q3 17 Results 13 1 3 � Closed 68 branches since Q3 16 2 Supplier Headcount Branches Efficiency Annualised delivered Renegotiation cost savings vs Q1 � Reduced central headcount by c. 100 17 run rate Outlook � Closed former head office site Costs reducing in line with plan � Renegotiated terms with suppliers £m Q1 Q2 Q3 Q3 v Q&A 2017 2017 2017 Q1 � All implementation costs now incurred Rental segment; Distribution, stock (20) (19) (19) +1 maintenance and other non-variable costs Appendix � Proforma benefit of £11m vs Q3 17 Services segment ; Non-variable costs (1) (1) (1) - LTM Branch, selling and central overheads (31) (31) (29) +2 Total overheads (52) ( 51) (49) +3 8

Third party net debt £8m lower against prior year Lower net debt balance 39 weeks ended 30 September 2017 / 40 weeks ended 1 October 2016 Headlines reflects: £m 2017 2016 Hero Acquisitions Limited – Q3 17 • Lower adjusted EBITDA Adjusted EBITDA 35.3 52.8 Q3 17 Results • Flow down of funds from Cash exceptional items (3.1) (12.5) PLC from December Working capital (8.4) (10.3) 2016 placing Capex 1 (24.5) (40.1) • Improved working capital Net interest paid (12.4) (12.1) management Outlook Tax paid (0.2) (0.1) • Capital efficiency and Intergroup funding including placing 13.4 - lower investment in non- Decrease / (increase) in 3 rd party net debt fleet capex 0.1 (22.3) Q&A Opening 3 rd Party net debt (232.1) (218.1) • Disposal of non-core Closing 3 rd Party net debt cleaning equipment, (232.0) (240.4) rental and maintenance Appendix business in Q4 >£33m facility headroom at end of Q3 17 (Q3 16: less than £15m) 1 Gross of finance lease funding 9

Initiatives already undertaken improving continuing EBITDA ProForma Adjusted Headlines EBITDA 75 Hero Acquisitions Limited – Q3 17 Leverage Leverage 3.6x5 4.5x5 Q3 17 Results 65 4 55 11 5 Outlook 45 35 62 Q&A 52 25 Appendix 15 5 LTM Adjusted EBITDA Q4 16 ONE OFFS (1) COST SAVINGS Revenue run rate net of business PROFORMA Adjusted EBITDA divesture 10 (1) Realisation of supplier rebates and asset sales 9

Summary and outlook Headlines � October was the fifth successive month of EBITA profit, albeit marginally behind expectations Hero Acquisitions Limited – Q3 17 � Cost saving initiatives fully implemented by end of Q3, further analysis of cost Q3 17 Results base undertaken in Strategic Review � Asset utilisation in Q3 of 55% in Core and 76% in Specialist business � Net debt reduction remains key focus and continues to reduce since end of Q3 Outlook � We remain focused on improving Group profitability noting caution should October’s adverse seasonal effects continue for the remainder of the year Q&A � Facility and cash headroom now in excess of £35m (Oct 16 £15m) � Strategic Review progressing with update on 7 December 2017 Appendix 11

Headlines Q3 17 Results Outlook Q&A Appendix 12 Q&A Hero Acquisitions Limited – Q3 17