On July 23, 2024, Herc Holdings Inc (HRI, Financial) released its 8-K filing for the second quarter of 2024. Herc Holdings, an equipment rental company spun out of Hertz Global in 2016, is the third-largest equipment rental company in North America, with a fleet size of $6.4 billion. The company serves a diverse range of sectors, including commercial and residential construction, environmental, industrial, and entertainment production.
Performance Overview
Herc Holdings Inc (HRI, Financial) reported total revenues of $848 million for Q2 2024, a 6% increase from $802 million in the same period last year. This growth was driven by a record equipment rental revenue of $765 million, up 9% year-over-year, and a 3.5% increase in rental pricing. However, net income decreased by 8% to $70 million, or $2.46 per diluted share, missing the analyst estimate of $2.84 per share.
Financial Achievements and Challenges
The company achieved an adjusted EBITDA of $360 million, a 2% increase from the previous year, with an adjusted EBITDA margin of 42.5%. Despite these gains, Herc Holdings faced challenges in the local market due to a higher interest-rate environment, which led to a deceleration in local market revenue growth. This was offset by contributions from acquisitions that added 21 locations year-to-date, including 10 in the second quarter.
“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. 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,” said Larry Silber, president and chief executive officer of Herc Rentals.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenues | $848 million | $802 million |
| Net Income | $70 million | $76 million |
| Adjusted EBITDA | $360 million | $352 million |
| Adjusted EBITDA Margin | 42.5% | 43.9% |
Balance Sheet and Cash Flow
As of June 30, 2024, Herc Holdings reported total assets of $7.575 billion, up from $7.061 billion at the end of 2023. The company's net debt stood at $3.8 billion, with a net leverage ratio of 2.6x. Free cash flow for the first half of 2024 was $148 million, reflecting the company's strong cash generation capabilities.
Outlook and Strategic Initiatives
Herc Holdings reaffirmed its full-year 2024 guidance, expecting equipment rental revenue growth of 7% to 10% and adjusted EBITDA between $1.55 billion and $1.60 billion. The company continues to focus on strategic acquisitions and greenfield openings to drive growth and expand its market share.
“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,” added Silber.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Herc Holdings Inc for further details.
