10.05.2018

Herc reduces losses

US equipment rental company Herc, previously Hertz Equipment Rental has reported higher first quarter revenues and reduced losses.

Total revenue for the period was $431.3 million up 10.8 percent on the same period last year. This was largely due to a 15 percent improvement in rentals to $369.4 million, partially offset by lower sales of used equipment while other sales were relatively flat. The company posted a pre-tax loss of $15.2 million compared to a loss of 54.3 million last year.

Capital expenditure in the quarter was $82.5 million, while sales of used equipment from the fleet totalled $52.9 million. The average age of the fleet at the end of March was 49 months. Rental rates in the quarter were 2.8 percent higher than a year ago.

Chief executive Larry Silber said: “Our strong start to 2018 is evidence that our strategy is working. Our first quarter growth in rental revenue of 15.1 percent reflects the positive impact of our strategic initiatives in driving volume with average OEC fleet on rent increasing 7.1 percent. Our focus on urban markets and the continued improvement in fleet diversification and mix contributed to the strong year over year results. Our customer focused initiatives have helped increase our business with current customers and supported growth in new local accounts in the quarter. In addition, we are pleased with the progress we are making in improving flow-through so far this year."

"At the same time, we are focused on initiatives to improve our effectiveness in controlling transportation, maintenance and fuel costs. We recently engaged a major third party logistics firm to work with our branch network and are in the process of implementing regional fuel purchasing programmes. We are also focused on enhancing our working capital position by improving our accounts receivables and other cash generating programmes."

Vertikal Comment

While Herc is still struggling a little financially it is clearly making progress, although it will have to keep an eye on the age of its fleet, which is edging towards the higher end of the spectrum – but that does of course depend on fleet product mix. It is in fact raising its spending plans to $575 million, net after disposals, which ought to make decent dent in the average age.

The company is raising its full year estimates and could well break into the black by year end, ready for a better year in 2019.