HERC HOLDINGS INC.
OUR COMMITMENT TO CORPORATE CITIZENSHIP 2020
WE EQUIP OUR CUSTOMERS AND COMMUNITIES TO BUILD A BRIGHTER FUTURE.
ABOUT HERC RENTALS
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A MESSAGE FROM OUR CEO
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WE DO WHAT'S RIGHT
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PRIORITIZING SAFETY AND HEALTH
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COMMITMENT TO SUSTAINABILITY
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SUPPORTING TEAM HERC
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SERVING COMMUNITIES
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HERC HOLDINGS INC.
ABOUT HERC RENTALS Herc Rentals Inc. is a subsidiary of Herc Holdings Inc., shares of which are listed on the New York Stock Exchange under the stock symbol HRI. OUR VISION
2019 KEY FACTS
We aspire to be the supplier, employer and investment of choice in our industry.
1 Traded on the New York Stock Exchange under "HRI" since July 1, 2016.
OUR VALUES
1 One of the leading North American equipment rental companies.
We do what's right.
ighly 1 Estimated 3% market share in a h fragmented market.
We're in this together. We take responsibility. We achieve results. We prove ourselves every day.
OUR MISSION To ensure that end users of our equipment and services achieve optimal performance safely, efficiently and effectively.
1 ~$2 billion in total revenues.
1 ~$3.82 billion in fleet (OEC).* 1 ~5,100 employees.
1 ~275 company operated locations. * Original equipment cost (OEC) based on American Rental Association guidelines. OEC as of December 31, 2019.
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OUR CORPORATE CITIZENSHIP CHARTER 1 Prioritize the safety and well-being of our employees, customers and communities. 1 Minimize and continuously seek to reduce environmental impacts associated with our business activities. 1 Align business practices and policies to reflect our responsibilities as a corporate citizen and to support mutually beneficial outcomes across our stakeholder groups.
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A MESSAGE FROM OUR CEO Our company's Purpose — "We equip our customers and communities to build a brighter future" — not only inspires Team Herc as we perform our daily work but also confers an obligation to operate mindful of our commitments as a responsible corporate citizen.
LARRY SILBER PRESIDENT AND CHIEF EXECUTIVE OFFICER
We embrace that obligation throughout our organization, which encompasses approximately 275 locations across North America. We approach our commitments from the framework of Responsible Value Creation, which recognizes our fundamental duty to operate according to sound social, environmental and people-related practices as we seek to create value for our customers, employees, communities and shareholders. Our Corporate Citizenship Charter (see page 2) articulates the core tenets of Responsible Value Creation: 1 Prioritize safety and health 1 Minimize environmental impacts from our activities 1 Recognize the interests of our core stakeholders
and the International Labor Organization's 1998 Declaration on Fundamental Principles and Rights at Work. Because safety is our most important priority, Herc Rentals expects its vendors, suppliers and contractors to adhere to all company safety requirements and applicable local, state/provincial and federal/national safety regulations while visiting company facilities. We also expect all our vendors, suppliers and contractors to operate in accordance with all relevant local, state/provincial, and federal/national environmental regulations. This report sets forth the company's commitment to and continuing progress in business practices that reflect our responsibilities as a corporate citizen. I thank all Herc Rentals team members for their ongoing efforts to conserve energy, fuel, water, and other natural resources, as well as helping our customers and communities build a brighter future. I look forward to sharing Team Herc's continuing progress across the social, environmental and people-related dimensions that are critical in pursuing our vision to be the supplier, employer and investment of choice in our industry.
In applying this charter, our minimum standard is to comply with all applicable laws and regulations in the jurisdictions in which we operate and conduct business. Additionally, our values demand an elevated commitment to operate ethically and with integrity, and this consideration directly informs our business practices. And, ultimately, our business success depends on earning and maintaining the trust and goodwill of customers, communities and entities that influence our operational standing. Importantly, we extend our Corporate Citizenship Charter to our vendors and suppliers, who we hold to the same standards and principles by which we operate. These standards and principles include adherence to UN Guiding Principles on Business and Human Rights and international human rights principles encompassed by the Universal Declaration of Human Rights, including those contained within the International Bill of Rights
Photo: Robert Sciarrino/ROI-NJ
LARRY SILBER PRESIDENT AND CHIEF EXECUTIVE OFFICER HERC HOLDINGS INC. May 12, 2020
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WE DO WHAT'S RIGHT Our foremost value, "We do what's right," sets the expectation that all team members will uphold the law and treat everyone with respect. By extension, we are committed to a culture of ethics and integrity and to operating our business in a manner that earns and keeps the trust of our customers, investors, employees, communities and other key stakeholders. We formalize this commitment: All team members must complete online ethics training and certify annually that they have read and understand our company's Code of Ethics, which governs conduct across many areas of our business and offers guidance on asking questions or reporting concerns about potential violations of the law or company policies. All newly hired team members are also required to acknowledge our Code of Ethics as part of their onboarding process.
To further enable a culture of ethics and integrity, every company facility posts information about our Compliance HelpLine, a confidential third-party service that team members can call to report suspected unethical behavior or violations of our company's policies, to seek guidance on our policies and procedures, or to offer suggestions. Team members can do all this anonymously if they choose.
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PRIORITIZING SAFETY AND HEALTH Herc Rentals requires an active commitment to, and accountability for, safety and safety compliance from all employees and its contractors. Herc Rentals operations management has the key leadership role in communicating, implementing, and ensuring conformance to safety and compliance policies and standards. At Herc Rentals, we are all committed to:
1 Protecting, and striving for improvement of, the safety and health of our people at all times;
1 Eliminating non-conformance to safety procedures and accidents;
1 Meeting specified customer safety requirements and ensuring continuous customer satisfaction;
1 Setting safety performance objectives, measuring results, assessing and continually improving processes and services through effective safety programs and processes;
1 Planning for, effectively responding to and rapidly recovering from any emergency, crisis and business disruption;
1 Appropriately communicating our safety policies,
1 Rewarding outstanding safety performance; 1 Improving our performance on safety issues relevant to our internal and external stakeholders and on which we can have an impact;
1 Complying with applicable legislation, regulations, and industry standards related to safety;
1 Building a culture where "Stop Work" to ensure safety is understood as an individual obligation and company responsibility;
1 Identifying and effectively managing safety risks; 1 Allocating appropriate resources to implement safety-oriented operational practices and procedures; and
1 Making every day a "Perfect Day." The commitments expressed here are in addition to our basic obligations to comply with the Herc Rentals Mission, Vision, Values and Code of Ethics, as well as all applicable laws and regulations where we operate.
standards, programs and performance;
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THE PERFECT DAY
In 2018 we adopted the concept of the "Perfect Day," which is defined as a working day across our entire company in which we have: 1 No OSHA recordable incidents; 1 No Department of Transportation violations; and 1 No "at fault" motor vehicle accidents. All our operating regions achieved at least 85% Perfect Days in 2019. We are committed to improving our Perfect Day performance and achieving the 100% mark we aspire to. Our safety-first culture and ongoing implementation of vehicle safety enhancements, such as back-up cameras, active brake assist, lane-departure warning and frontand-rear parking assist technologies, will support our progress in achieving Perfect Days.
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BUILDING A SAFETY FIRST CULTURE Our safety culture is predicated on training, communications, empowerment, measurement and recognition. Training includes more than 300 online, on-demand courses available to all team members; weekly branch "Toolbox Safety Meetings" centered on a key safety area of focus; Safety Guides; and a "Lessons Learned" library of incidents and preventative recommendations.
an incident. The SWA is supported through Safety Alert communications that emphasize safety practices and a daily observation program at our locations that prepares team members to assess their work environment and tasks for potential hazards.
Safety communications include an annual commitment to safety and ongoing safety reminders from the CEO; monthly "Safety Thoughts" messages that reinforce safety awareness and behaviors at work and at home; safety boards at every branch that serve as a dedicated resource for safety-related information; and morning stretch and safety huddles at all locations to help get every working day off to a safe start.
In addition to tracking and sharing standard safety performance metrics, we have established a Safety Dashboard that measures all branch locations on leading safety indicators, including training, monthly branch inspections, Toolbox Safety Meetings, employee observations and total safety inspection findings, we share Safety Dashboard performance internally every quarter.
All team members are empowered to intervene with a Stop Work Authority (SWA) when they perceive an unacceptable safety condition, act or situation where an individual's lack of understanding could result in
All branch locations have instituted Safety Councils, which are led by a non-management volunteer and comprised of non-management members of Team Herc. Members of our Safety Councils are tasked with
identifying and addressing safety hazards and recommending safety improvements that can be undertaken at the branch level. Leading safety performance is recognized each year at our annual ProExpo company-wide business meeting and individual and team safety achievements are celebrated throughout the year on location, through our weekly Herc Wire publication and company newsletters like The On Ramp for our professional drivers and The Tool Box for our service technicians. Additionally, drivers and technicians who have demonstrated positive safety behaviors are presented with a "Think Safety" sticker, which they can display on their vehicle or toolboxes. The company also recognizes outstanding regional and district safety performance during annual events and award ceremonies.
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5.0
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SAFETY PERFORMANCE We expect to achieve annual safety performance levels equal to or better than the industry average and we are committed to ensuring we have the training, tools and time necessary to keep safety at the forefront of everything we do. Our Total Recordable Incident Rate (TRIR) has improved 27% since 2016 despite two out of three years involving higher work activity associated with revenue growth and supporting multiple natural disasters across North America. WASTEWATER
NATURAL GAS
GALLONS (millions)
40
37.6
36.7 33.0
RECYCLED OIL
MMBTU (thousands)
160
33.7
TRIR
GALLONS (thousands)
150
265 241
132 120
229
2.00
1.00
.65 1.11
1.05
0.99
.56 0.50
92
.39
0.50
.53 .39
.34
100
0 2016 2017 2018 2019
1.00
.73
1.35
200
80
LOST TIME CASE RATE
.82
232
1.00
20
LTC
DAYS AWAY/RESTRICTED, TRANSFER RATE
300
123 30
DART
TOTAL RECORDABLE INCIDENT RATE
2016 2017 2018 2019
2016 2017 2018 2019
0 2016 2017 2018 2019
0 2016 2017 2018 2019
2016 2017 2018 2019
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SAFETY TRAINING
Our safety mission extends to helping our customers' people operate our equipment safely and supporting their worksites' safe operating practices. We offer training on our equipment; we offer to perform safety assessments at customer worksites and provide suggestions for improvement; we participate in customers' safety teams as a partner in reducing workplace hazards; and we apply our own required safety protocols whenever we visit a customer worksite.
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COMMITMENT TO SUSTAINABILITY OUR ENVIRONMENTAL PROFILE OPERATIONS Our operations generally do not raise significant environmental, health, or safety risks, but we use hazardous materials to clean and maintain equipment, dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from storage tanks at certain of our locations.
CLIMATE CHANGE RISK STATEMENT The U.S. Congress and other legislative and regulatory authorities in the United States and internationally have considered, and likely will continue to consider, numerous measures related to climate change, greenhouse gas emissions and other laws and regulations affecting our end markets, such as oil, gas and other natural resource extraction. Should such laws and regulations become effective, demand for our services could be affected, our fleet and/or other costs could increase and our business could be materially adversely affected. Refer to our Form 10-K for the fiscal year ended December 31, 2019, for additional information.
ENVIRONMENTAL MANAGEMENT POLICY We are committed to minimizing the impact of our equipment rental operations on the environment by implementing programs that incorporate sound environmental policy. We operate in accordance with all relevant local, state, and federal regulations and will strive to use pollution prevention and best management practices throughout our branches to:
1 Handle, store, and dispose of substances that are defined as hazardous material in compliance with local, state, and federal regulation;
1 Reduce, reuse, and recycle our waste products as much as possible;
1 Minimize water consumption and ensure safe water treatment within our branches by incorporating innovative design of wastewater treatment systems;
1 Minimize energy consumption by employing energy reducing initiatives;
1 When required by local, state, and federal regulations, develop and maintain appropriate emergency and spill response programs;
1 Whenever possible, purchase products and services that do the least damage to the environment and communicating this commitment to our vendors;
1 Monitor the environmental impact of our business
1 Conduct regular training for staff working in and around petroleum storage tanks to educate on practices related to hazardous materials stored onsite, as well as regular inspections of storage tanks, dispensers, and critical safety devices;
practices and review our progress on a continual basis; and
1 Promote environmental stewardship and best management practices to our customers when using our rental equipment.
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OPERATIONS We continue to seek reduction in our electricity, natural gas, and water usage as well as wastewater across our facilities. Year-to-year changes in these areas are subject to several variables, including net change in the number of our facilities; rental volume and velocity; customer and product mix; and weather. In 2019, our second year of deploying a closed-loop recycling program for used oil through a third-party partner, the program increased its recycled oil by 32,000 gallons, reaching approximately 265,000 gallons of recycled oil.
ELECTRIC
WATER
KWh (millions)
WASTEWATER
GALLONS (millions)
30
65.0
65
40
27.2 26.9 25
45
45.7
33.0
49.0 47.7
160
33.7
GALLONS (thousands)
150
300
265 241
132
229
2.00
232
123 30
120
200
1.00
22.2
20
RECYCLED OIL
MMBTU (thousands)
37.6
36.7
25.6
NATURAL GAS
GALLONS (millions)
92 25
20
80
100
0 2016 2017 2018 2019
2016 2017 2018 2019
2016 2017 2018 2019
2016 2017 2018 2019
2016 2017 2018 2019
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ECO-FRIENDLIER FLEET Approximately 50% of our applicable equipment rental fleet is Tier 4 compliant, with that percentage expected to increase 10% each year through normal fleet rotation. Overall, our fleet composition continues to evolve toward more efficient compact equipment and a smaller proportion of emissions-generating gear. In partnership with our suppliers, we are increasing the number of energy-efficient products in our fleet, with some categories — such as telehandlers and light towers — offering up to 50% greater fuel efficiency than alternatives in the market. Our environmentally friendlier fleet includes LED-light equipped and solar-powered portable light towers, electric-powered industrial forklifts, a range of battery-powered and hybrid aerial equipment, and electric air compressors. We continuously look for opportunities to add fleet with zero emissions, as several leading OEMs develop extended-life battery-powered, hybrid and fully electric solutions.
We also offer equipment that reduces noise and dust associated with their use or from other sources. Our CitySilent™ sound attenuation system for continuous-duty gear, such as generators and light towers, as well as our noise-mitigation panels significantly reduce worksite noise pollution. Our containment systems keep noise and dust out of the work environment. Our dust-control solutions help protect concrete and masonry workers and comply with OSHA regulations pertaining to respirable silica dust, while our dust suppression fog cannons keep worksite particulates in check. In addition, we are transitioning our fleet of rental and internal-use half-ton pick-up trucks to be equipped with four-cylinder engines, which will reduce fuel consumption in these vehicles by approximately 15%. And we supply rental equipment to support alternative-energy construction, including solar and wind farms.
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SUPPORTING TEAM HERC COMMITMENT TO A SAFE, INCLUSIVE AND RESPONSIBLE CULTURE Our Labor and Workplace Policy outlines our commitment to providing a working environment that recognizes the dignity and value of all team members. We seek to advance the diversity of the people on our team and to provide an inclusive environment where all contributions and perspectives are valued. We are committed to equal opportunity and to maintaining workplaces that are free from discrimination or harassment. We do not tolerate disrespectful or inappropriate behavior, unfair treatment or retaliation of any kind. We are committed to complying with all applicable safety and health laws and regulations and providing a safe and healthy workplace, including one that is free from violence, harassment, intimidation and other unsafe or disruptive conditions due to physical, verbal or online threats. In addition, we are committed to complying with applicable labor and employment laws wherever we operate and adhering to and promoting human rights in accordance with the UN Guiding Principles on Business and Human Rights. O U R C O M M I T M E N T T O C O R P O R AT E C I T I Z E N S H I P 2 0 2 0
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BUILDING AN INCLUSIVE TEAM Our long-term strategy underscores the understanding that our success depends on the dedication and capability of our team members. We are focused on attracting, retaining and empowering talented and dedicated people as part of building the best team in the equipment rental industry. We also seek to build a team that reflects the variety of people, cultures and communities we interact with every day and to create an inclusive, productive environment in which all team members feel valued and respected. In keeping with our commitment to diversity and inclusion, we seek to advance opportunities for women in our company and, by extension, the equipment rental industry. As of the end of 2019, Herc Rentals' workforce included 591 women, or nearly 12% of our workforce. We also seek to increase the number of women in leadership roles. Two women (20%) serve as nonexecutive members of Herc Holdings Inc.'s Board of Directors; seven women (approximately 18%) comprise Herc Rentals' Senior Leadership Team; and 23 women (approximately 8%) lead local teams as Branch Managers. The company's efforts in building an inclusive team also involved the creation of a women's employee resource group called Women in Action. The group, which held its first meeting in September 2019, seeks to empower, support and develop women by facilitating the exchange of knowledge and experiences through learning opportunities as well as with internal and external networking events.
We are committed to hiring military veterans across all areas of our business (as of the time of this report, our workforce included 460 veterans). In support of that commitment, we are proud to be recognized as a Military Friendly employer for 2020 (for the fifth consecutive year), a participant in the Department of Defense's Employer Support of the Guard and Reserve (ESGR) as well as the U.S. Army Partnership for Youth Success. In 2019, Herc Rentals was honored with the Department of Defense's Patriot Award — an award given to companies as a way to recognize employers who have gone above and beyond the Uniformed Services Employment and Reemployment Rights Act. In addition, in 2019 we supported the launch of a Herc Rentals Veteran Resource Group to offer veterans on Team Herc a community of support, networking, collaboration, learning and sharing. O U R C O M M I T M E N T T O C O R P O R AT E C I T I Z E N S H I P 2 0 2 0
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INVESTING IN OUR PEOPLE
We offer team members a host of learning and development opportunities spanning instructor-led and online, on-demand courses that support improved performance and effectiveness as well as personal and professional growth. These opportunities apply to all team members across all stages of career progression and job responsibilities. More than a dozen instructor-led courses enhance team members' sales, managerial leadership and role-specific skills, such as our ProDriver Academy, Yard-to-Driver program, Shop and Counter Operations, and a Professional Development Series designed to improve the skills necessary to navigate and succeed in the workplace. Overall, Herc Rentals team members benefited from nearly 120,000 hours of training in 2019. We continue to expand our instructor-led and online course catalog to support our continued focus on safety, operational excellence, customer service and team member development.
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SUPPORTING TEAM HERC'S CULTURE In the fourth quarter of 2019 we engaged a third-party firm to conduct our second team member survey as an independent company. Approximately 1,500 more team members participated in the survey compared to our first survey in late 2018. That translates to a response rate of approximately 84%, making our survey process more inclusive and resulting in a more representative evaluation of our workplace culture. We again scored above benchmark averages across six dimensions of workplace culture, but below aspirational targets in each area.
1 Developing a Purpose statement to articulate
In 2019, based on our first team member survey, we acted on opportunities to improve team member engagement and workplace culture. Among our actions included:
1 Increasing recognition and appreciation
1 Adding a new pillar to our company's long-term strategy related to our people and culture;
the fact that we collectively work toward a greater good;
1 Creating several new learning and development opportunities, such as our Black & Gold Early Career Program, ProDriver Academy and numerous additions to our Herc University course catalog;
1 Establishing targeted communications for our professional drivers and service technicians, and ongoing refinement of other internal communication platforms; opportunities for team members across our operations; and
1 Advancing employee-driven support networks, including our Women in Action and Veteran Resource Group communities of interest.
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SERVING COMMUNITIES With approximately 275 locations accross North America, we play an important economic and social role wherever we work and live. We believe that our philanthropic and volunteer activities are best managed at the local level, with each of our equipment-rental branches basing their efforts on available resources and community needs. Team members also provide ongoing support to community programs across North America, such as volunteering for litter removal, serving as youth recreation coaches, giving blood, organizing food drives, mentoring disadvantaged youths and participating in Habitat for Humanity projects.
WE HAVE APPROXIMATELY 275 COMPANY OPERATED LOCATIONS ACROSS THE UNITED STATES AND CANADA.
On a more formal basis, the company has established a philanthropic partnership with Youth Haven, which offers a safe harbor for traumatized, abused, neglected and homeless children in Southwest Florida.
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READY TO RESPOND
In 2019, Herc Rentals branches and team members responded to flooding, hurricanes, tornadoes, wildfires and severe winter weather by staging and rapidly deploying equipment where urgently needed, ensuring a rapid response to devastated communities. Our response often meant the difference in saving homes, businesses and possessions; restoring a sense of normalcy in the aftermath of disasters; and providing peace of mind and comfort to the many lives we touched. Our strategically located Climate Remediation Centers represent a critical resource in supplying pump, power, dehumidification, drying, and air purification equipment to support responses to natural disasters. Most recently, our air scrubbers, containment wall systems, portable power and lighting equipment, and climate control gear were instrumental in supporting hospitals and healthcare facilities in response to the COVID-19 pandemic.
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COPING WITH COVID-19 Herc Rentals cares deeply about the safety and health of our team members, our customers' employees, and the citizens of our communities. Although this report primarily details our 2019 progress in social, environmental and people-related areas, at the time of its production we remain in the midst of the coronavirus (COVID-19) pandemic. Our company has taken steps to mitigate the impact of COVID-19 on our team members, customers and communities, while also ensuring that we remain positioned to support essential business and government sectors. Our company moved quickly to implement new operational practices across all locations consistent with the U.S. Centers for Disease Control and Prevention (CDC) guidance. These actions included:
1 Instructing team members on new safety and health protocols, and apprising them of benefits and other policies in the event of an extended location shut down or required quarantine period.
1 Procuring essential cleaning materials, protective gear and disinfectants.
1 Implementing additional cleaning procedures for branch operations and returned equipment.
1 Frequent organizational communications, including daily COVID-19 bulletins regarding adjusted safety and standard operating procedures based on updated CDC guidance and overall increased frequency of communications at all levels of the organization through multiple channels.
Additionally, because of the equipment and services we provide, Herc Rentals is considered an "essential service" with the ability to conduct its operations in support of critical industries and services during the COVID-19 pandemic. Team Herc stood ready to help all the industries that were crucial to overcoming these challenges, including:
1 Responding to hospitals and healthcare facilities with temporary structures, portable power and lighting, climate control and similar equipment;
1 Supporting the public sector with equipment that helped our communities address urgent safety and health measures;
1 Providing material handling and related equipment to warehouse distribution centers to support their operations; and
1 Helping electric, water and other utilities maintain their vital services. O U R C O M M I T M E N T T O C O R P O R AT E C I T I Z E N S H I P 2 0 2 0
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HERC HOLDINGS INC. 27500 RIVERVIEW CENTER BLVD. BONITA SPRINGS, FL 34134
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