Herc returns to growth
US based Herc Rentals has reported a strong start to the year after posting real growth on 2020.
First quarter revenues were four percent higher than the first quarter 2020 at $453.8 million with growth in both rental and sales. Pre-tax profits for the period were $41.1 million, compared to a loss in first quarter 2020 of $2.6 million. Rental rates declined 0.3 percent on 2020, but were more than made up for by higher utilisation.
Capital expenditure on the fleet was $90.9 million, up from $83 million in the first quarter of 2020, while the company has lifted it full year capital expenditure plans to $400 to $450 million. Net debt at the end of March was $1.66 billion, while the average age of the fleet was roughly the same as this time last year at 48 months. The company is now forecasting full year revenues of $800 to $840 million.
Chief executive Larry Silber said: "Our year is off to a great start with first quarter total revenues up four percent and adjusted EBITDA up 25 percent compared with last year. Our adjusted EBITDA margin hit a record for the first quarter of 40.7 percent and reflects the strength of our operating model. Strong performance by our ProSolutions and entertainment rental businesses drove rental revenue growth, and the efficient execution of our operating model propelled adjusted EBITDA margin expansion of 680 basis points. Our focus on customer service and the consistent implementation of a strategy to diversify our customer and industry base continues to demonstrate the strength of our business."
"Our strong first quarter performance along with the trends we are seeing in the market have prompted us to raise our adjusted EBITDA guidance for the year. Our guidance range for adjusted EBITDA now exceeds our pre-pandemic 2019 results by eight to 13 percent. Overall, our end markets are showing positive momentum and demand for rental equipment is increasing. We intend to continue to take market share in our specialty businesses and to maximise our operating leverage as revenue growth accelerates in the seasonally strong part of the year."
A very positive start to the first quarter reporting season, Herc really appears to have overcome its initial challenges after its separation from Hertz. The business still has substantial debt, but it is coming down and during latest quarter was at the lower end of its forecasts in terms of leverage.
All in all a positive and encouraging set of numbers.