14.11.2023

Herc maintains growth

US rental company Herc Rentals has reported strong third quarter revenue growth maintaining its momentum into the fourth quarter.

YTD

Total revenues for the nine months to the end of September increased 25 percent to $2.45 billion, thanks to acquisitions, which added 14 new locations, plus 13 greenfield site openings and a 6.7 percent improvement in rental rates. Growth came across all areas of the business led by rental.
Pre-tax profit for the period was $324 million up eight percent on last year.
Capex Capital expenditure over the nine months was $1.1 billion up almost 32 percent on the same period last year, helping reduce the average age of the fleet from 49 to 45 months.
Net Debt at the end of the period was $3.6 billion up almost 29 percent on last year.

Third Quarter

Total revenues were 22 percent higher at $908 million
Pre-Tax Profit improved 8.5 percent to $146 million

Chief executive Larry Silber said: “We continued to leverage our core strengths in market coverage, fleet management, pricing discipline and a ‘best in class’ team to deliver double digit revenue and Adjusted EBITDA growth in the third quarter. Over the course of the quarter, we also successfully rebalanced our fleet after a wave of back ordered supply was delivered in the first half of the year. And, with the health of the supply chain improving, we were able to accelerate used fleet sales after two years to refresh our offering and make way for the new equipment.”

“Continued investments in our premium fleet offering, strategic acquisitions and advanced technologies, along with robust demand across key end markets and a focus on cost discipline are driving the momentum in our business and will support sustainable, profitable growth over the long term."

"Given our belief that the company's valuation is discounted compared to our long term growth expectations, we acquired $59 million of common stock during the third quarter. Consistent with our capital allocation goals, we expect to remain within our targeted net leverage range of 2x to 3x while executing on our long-term strategy of organic and M&A growth, and allocating capital to our shareholders."

Vertikal Comment

Another strong performance from Herc, which is doing a lot things well and on track for further growth in 2024. The only downside is the size of its debt pile, which while perfectly manageable at the moment is costing a great deal more in interest payments and has grown significantly over the past 12 months. However it is at least using it to renew its fleet and add good quality bolt on acquisitions.
As a result - The future does look bright.