Herc Rentals Reports 9% Increase of Rental Revenue

Highlights

• Record equipment rental revenue of $765 million, an increase of 9%
• Record total revenues of $848 million, an increase of 6%
• Rental pricing increased 3.5% year-over-year
• M&A and greenfield openings offset impact from decelerating local-market revenue growth
• Net income decreased 8% to $70 million, or $2.46 per diluted share
• Adjusted EBITDA of $360 million increased 2%; adjusted EBITDA margin of 42.5%
• Free cash flow of $148 million for the six months ended June 30, 2024

“In the second quarter, we benefited from positive rental pricing, increasing fleet efficiency, and expanding market share, as we continue to significantly outpace rental-industry growth. Overall, our record second quarter revenue results came in according to our expectations. However, while national mega projects are on plan, we saw a greater deceleration in the local market's growth trajectory versus our forecast, primarily driven by the persistently higher interest-rate environment. The local-revenue deficit was essentially offset by contributions from acquisitions that added 21 locations year to date, including 10 in the second quarter,” says Larry Silber, president and chief executive officer of Herc Rentals. "As is typical, these new acquisitions and greenfields initially generate lower incremental margins than our established local-account business, which reflected an unfavorable trade-off in profitability in the second quarter.

"Looking to the second half of the year, mega project activity is ramping up into the peak season as anticipated. Higher revenue growth for the rest of the year and incremental adjustments made in the second quarter to better align our local cost structure should support more normal margin and REBITDA flow through for the back half of 2024," says Silber. “Based on current line-of-sight to market trends, we expect to deliver record full year results and are reaffirming our annual performance targets. Despite temporarily slower growth in the more rate-sensitive local market this year, the outlook for rental demand long-term is robust as the pipeline for mega projects remains strong, data center construction is accelerating, federal infrastructure spending continues to roll out, and rental penetration increases.”

More financial results on the company can be found at IR.HercRentals.com.