Herc Holdings Inc. Reports Third Quarter Results

NEW YORK – Herc Holdings Inc. (NYSE:HRI) announced record third-quarter revenue but fell short of earnings estimates due to higher costs, despite strong rental demand. Following the announcement, HRI shares traded flat.

The equipment rental company reported adjusted earnings per share of $4.35, missing analyst expectations of $4.55. Nonetheless, total revenue rose 6% year-over-year to $965 million, exceeding the consensus estimate of $934.81 million.

Equipment Rental Revenue

Herc's largest segment, equipment rental revenue, surged 13% to $866 million compared to the previous year. The company indicated a 2.3% YoY rental pricing increase, with volume growing 10.7%.

> "In the third quarter, we significantly outpaced overall industry growth on both a total rental revenue basis and from an organic revenue perspective," said Larry Silber, president and CEO of Herc Holdings. "By capitalizing on our broad end-market coverage, diversified product and services offering, and expanding share in resilient urban markets, we continue to deliver strong volume and solid price/mix performance."

Profitability Challenges

Despite revenue gains, increased costs affected profitability. Direct operating expenses grew to 38.6% of equipment rental revenue from 37.6% the previous year, attributed to growth-related personnel and facilities costs. Interest expenses rose to $69 million from $60 million last year due to higher borrowings.

Outlook for 2024

For full-year 2024, Herc narrowed its equipment rental revenue growth forecast to 9.5-11%, up from a prior estimate of 7-10%. The company maintained its adjusted EBITDA forecast between $1.55 billion to $1.60 billion.

With strong rental demand offsetting cost pressures, Herc is positioned for growth as it expands through acquisitions and new branch openings. Managing expenses will be crucial for enhancing profitability moving forward.

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