Stock pitch of Herc Rentals, traded on the New York Stock Exchange (NYSE). Target price created through a Discounted Cash Flow (DCF) analysis with the EBITDA multiple approach. Sources: Company Website, Company Filings, Thomson One, RBC Capital Markets, KeyBank Capital Markets, GAMCO Investors, Yahoo! Finance, Independent, PwC, Oxford Economics,

1. Herc Rentals
NYSE:HRI
Matthew Stackhouse
matthew.stackhouse@queensu.ca
Recommendation: Buy | November 14, 2016

2. § Herc Rentals (HRI) is a diversified equipment rental company with a balancedbusiness profile
§ Operates out of 280 company-ownedbranches around theworld to provide customers with
equipment, services and solutions necessary to achieve optimal performance
§ Serves a broad range of customer end user markets, including construction, industrial,
government, infrastructure, remediation,emergency response, entertainmentand events,
facilities and maintenance
§ Separated from Hertz’s rental car business on June 30, 2016, enabling thefirm to have financial
and operational flexibility to pursue strategies specific to theequipment rental business
§ Own approximately $3.5Bnin fleet and have total revenues of approximately $1.6Bn, making it
the third largest equipment-rental firm by revenue
2
Business Description
North American Equipment Rental
Market
Sources: Company Website, RBC Capital Markets, KeyBank Capital Markets
Company Overview
Management Team
• Experienced leadership team, with the
CEO, COO, & CIO have more than 30
years of equipment industry experience
• The regional vice-presidents have an
average of 24 years of industry experience
“The opportunity in Herc lies in the company's growth.Down the road as it improves its margins […] the stock will rise to $78
per share in the next three years.” – Mario Gabelli

3. § Equipment rentals is a $45Bn
business growing at 4% to 5%
§ Highly fragmented, with threemajor
players benefitting from the
increase in infrastructure spending
§ Decreasing production in the
upstream oil and gas markets
3
Investment Thesis I
Sources: Company Website, RBC Capital Markets, KeyBank Capital Markets, GAMCO Investors, Yahoo! Finance, Independent
Investment Thesis
Investment Thesis II
Investment Thesis III
§ Strong asset base, including a $3.5Bn fleet of
machines, and 280 company-owned branches
around with 270 in the United States and
Canada
§ Expanding products and services, by adding
smaller products such as floor scrubbers
§ Focused on expanding ProSolutions and
ProContractor tools in North America
§ The United States currently has poor infrastructure, with 40% of
bridges being rated as D- by the ASCE
§ American infrastructure spending projected to increase $1Tn
Growing Equipment Rental Business Projected Increase in Infrastructure Spending
Strong Asset Base and Broad Footprint in North America

4. § Global infrastructure spending to reach
$9Tn by 2025, with the United States
projecting $1Tn in infrastructure spending
by 2025
§ Currently a$45Bn business growing at 4-
5%
4
Catalysts
Sources: Company Website, BMI Research, Yahoo! Finance, PwC, Oxford Economics
Catalysts and Risks
Risks
§ Only 10 locations
outside North America
§ Canada and the United
States currently
represent 82% of total
revenue
§ Making strategic changes to reduce fleet and
control costs in upstreamoil & gas markets
§ Made strategic changes to deemphasize low
margin new equipment sales
§ Implemented new rental training programs to
support the ProSolutions and ProContractor gear
Increasing Global Infrastructure Spending
Strategic Changes to Equipment Lines
Highly Fragmented Industry
§ Highly fragmented industry,with top 3
major players benefitting the most
§ Strong asset base of machines that could
handle an increased market demand
Non-Residential Construction
§ Non-residential
construction
slowed in 2016,
but still remains
positive
§ Significant portionof
the fleet that is
unavailable for rent
§ Due to oversupply of
certain used equipment
Worldwide Markets
Fleet Availability

5. 5
Valuation Range
Sources: Company Filings
See Appendix for Valuation Model Breakdowns
Valuation & Conclusion
Price Target Summary Justification
28.3
20.9
28.97
59.6
54.1
38.20
10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0
DCF Value at 4.0x-6.0x Exit EBITDA Range
DCF Value at 2.0%-4.0% Perpetuity Range
52 Week Market High/Low
DCF / LBO Football Field
Target Price: $52
Target Price $52.00
Current Market Price $39.86
Implied 1-Year Return 30.5%
§ The Discounted Cash Flow Value at 2.0% to 4.0%
perpetuity range heavily discounts the growth of Herc
due to new macro trends in fiscal spending
Market Cap $1.13Bn Enterprise Value $3,151Bn
Price/Earnings 15.73x
Herc's experienced executive team,combined with new macro trends in fiscal spending on infrastructure,provides a very
unique & attractive entry-pointfor investors.

6. 6
Public Company Comparables
Sources: Company Filings, Thomson One
Appendix I: Comparable Companies
Car Rental EV / EBITDA EV / Sales Price / Earnings
(US$ millions, except per share data) Enterprise Value
Equity
Value
Price LTM FY1 FY2 LTM FY1 FY2 LTM FY1 FY2
Peer Group Name
Avis Budget $16,312.01 $3,331.01 $37.90 5.6 x 19.3 x 18.5 x 1.9 x 1.9 x 1.8 x 19.0 x 12.8 x 11.1 x
Hertz Global $16,143.05 $2,362.05 $28.47 4.4 x 23.1 x 18.3 x 1.7 x 1.8 x 1.8 x NEG 41.7 x 9.5 x
Sixt $4,688.35 $2,511.44 $58.99 6.0 x 5.8 x 5.3 x 1.8 x 1.7 x 1.6 x 21.8 x 19.1 x 16.7 x
Europcar Groupe $3,839.57 $1,351.76 $9.43 8.5 x 13.7 x 13.2 x 1.6 x 1.6 x 1.6 x 11.9 x 10.3 x 9.4 x
MEAN $10,245.75 $2,389.06 – 6.1 x 15.5 x 13.8 x 1.7 x 1.8 x 1.7 x 17.6 x 21.0 x 11.7 x
HERC Holdings $3,151 $1,077 $38.04 5.6x 5.9x 5.5x 2.0x 2.0x 1.9x 15.7x 496.2x 43.1x
Equipment Rental Public Comps EV / EBITDA EV / Sales Price / Earnings
(US$ millions, except per share data) Enterprise Value
Equity
Value
Price LTM FY1 FY2 LTM FY1 FY2 LTM FY1 FY2
Peer Group Name
United Rentals Inc $15,114.09 $7,681.27 $89.50 5.6 x 5.7 x 5.6 x 2.6 x 2.7 x 2.7 x 13.7 x 10.8 x 10.6 x
H&E Equipment Services $1,333.24 $613.02 $15.18 4.7 x 4.4 x 4.4 x 1.4 x 1.4 x 1.4 x 13.5 x 15.7 x 15.4 x
Ritchie Bros. Auctioneers Incorporated $3,917.27 $4,086.18 38.30 20.3 x 18.7 x 16.8 x 7.0 x 7.0 x 6.6 x 37.6 x 32.5 x 29.1 x
Allison Transmission Holdings, INC. $7,142.52 $5,138.52 31.07 12.9 x 11.5 x 11.4 x 3.7 x 4.0 x 3.9 x 31.5 x 26.8 x 22.7 x
Navistar International Corporation $6,458.29 $2,195.29 26.89 14.8 x 11.7 x 10.9 x 0.8 x 0.8 x 0.8 x NEG NEG 44.0 x
MEAN $6,793.08 $3,942.86 – 11.7 x 10.4 x 9.8 x 3.1 x 3.2 x 3.1 x 24.0 x 21.4 x 24.3 x
HERC Holdings $3,151 $1,077 $38.04 5.6x 5.9x 5.5x 2.0x 2.0x 1.9x 15.7x 496.2x 43.1x

7. 7
Projected Cash Flow and Share Price
Sources: Company Filings, Thomson One
Appendix II: Discounted Cash Flow Analysis
Free cash flow buildup
Fiscal year 2015A 2016E 2017E 2018E 2019E 2020E CAGR 2017-2021 Assumptions
Revenue 1500.0 1575.0 1693.1 1828.6 1965.7 2083.7 5.8%
Rental Truck Industry to grow at 6.8%
CAGR till end of 2020
Annual Growth - 5.0% 7.5% 8.0% 7.5% 6.0%
EBITDA 579.0 625.0 745.0 822.9 884.6 833.5 5.9%
Estimate 45% EBITDA margin, competitor
average historical
EBIT 127.8 245.0 368.8 450.4 508.4 449.8
Less Taxes 35.0% (45.6) (85.8) (129.1) (157.6) (177.9) (157.4) Currently has high Deferred Taxes
EBIAT (NOPAT) 82.2 159.3 239.7 292.8 330.5 292.4
Plus: Depreciation and amortization 383.3 380.0 376.2 372.4 376.2 383.7
Plus: Deferred Taxes 22.3 36.7 36.7 36.7 36.7 36.7 Net loss carryforwards straight line
Plus: Stock Based Compensation 3.0 3.0 3.0 3.0 3.0 3.0
Less: Increase in net working capital $(29.3) $(30.0) $(35.0) $(35.0) $(30.0) $(25.0)
Unlevered CFO 461.5 549.0 620.6 670.0 716.4 690.8
Less: Capital expenditures $(537.0) $(513.0) $(518.1) $(523.3) $(518.1) $(507.7) -0.2% Capex Historically Consistent
Less: Purchases of intangible assets - - - - - -
Unlevered FCF -75.5 36.0 102.5 146.6 198.3 183.1 38.4%
PV of FCFs 531.62
Exit EBITDA multiple approach
Terminal year EBITDA 833
Terminal value EBITDA multiple 6.0x
Terminal value 5,001
Present value of terminal value 4,150.0
Present value of stage 1 cash flows 531.6
Enterprise value 4,681.6
Implied TV perpetual growth rate 4.1%
Fair value per share
Enterprise value 4,682
Less: Net debt (2,058)
Equity value 2,623.6
Diluted shares 44.500
Equity value per share $58.96
Perpetuity approach
Normalized FCFt+1
183.07
Long term growth rate (g) 3.0%
Terminal value 3,974.2
Present value of terminal value 2,841.0
Present value of stage 1 cash flows 531.6
Enterprise value 3,372.7
Implied TV exit EBITDA multiple 4.8x
Fair value per share
Enterprise value 3,373
Less: Net debt (2,058)
Equity value 1,315
Diluted shares 44.500
Equity value per share $29.54
WACC: Long Term Growth Rate (g):
$29.54 2.0% 2.5% 3.0% 3.5% 4.0%
10.5% (3.66) (1.53) 0.89 3.65 6.84
9.5% 2.33 5.18 8.47 12.31 16.85
8.5% 10.17 14.14 18.82 24.44 31.32
7.5% 20.88 26.69 33.78 42.66 54.06
6.5% 36.36 45.52 57.31 73.02 95.02
5.5% 60.70 76.94 99.68 133.79 190.63
WACC: Exit EBITDA Multiple
$58.96 4.0x 4.5x 5.0x 5.5x 6.0x
10.5% 23.21 30.50 37.80 45.10 52.39
9.5% 24.85 32.31 39.78 47.24 54.71
8.5% 26.55 34.19 41.82 49.46 57.10
7.5% 28.31 36.12 43.94 51.75 59.57
6.5% 30.13 38.13 46.13 54.13 62.13
5.5% 32.01 40.20 48.39 56.58 64.77