17.02.2025

Solid year for Herc

US rental company Herc Rentals has reported its full year and fourth quarter results

Full year

Total revenues for the 12 months to the end of December increased almost nine percent to $3.57 billion, thanks to nine acquisitions which added 28 locations, along with the opening of 23 new greenfield locations and a 3.2 percent improvement in rental rates along with a slightly higher utilisation. Growth came entirely from the rental business, with the other sectors, such as used rental equipment sales were flat or slightly lower. Outlook for 2025 The company is forecasting revenues for this year of around $3.7 to 3.8 billion, an overall increase of around four to five percent.

Pre-tax profit plunged almost 35 percent to $211 million mostly due to a $194 million write down of Cinelease assets. Without that profits would have increased almost nine percent to $485 million.
Capex Capital expenditure over the year was $1.05 billion, 21 percent down on last year pushing the average age of the fleet from 45 to 46 months. This year it is reducing that further with a forecast of $700 to $900 million.
Net Debt at the end of the period was $4 billion, up almost 10 percent higher than at this time last year.

Fourth Quarter

Total revenues were 14 percent higher at $951 million
Pre-Tax Profit was actually a $43 million loss, compared to last years profit of $123 million due to the Cinelease asset write down. Without that the company would have made $151 million, an increase of almost 23 percent.

Chief executive Larry Silber said: "In 2024, despite a more challenging market than anticipated, we delivered another year of record results, significantly outperforming industry revenue growth by leveraging the strength of tenured customer relationships, the value derived from strategic capital-allocation priorities and our diversified position across products, geographies and end markets."

"While the higher for longer interest rate environment continues to pressure local market growth, we captured an outsized share of national account mega projects last year. We also completed nine acquisitions, supporting market consolidation and positioning our company for long-term growth opportunities and greater efficiencies of scale. Strategic pricing, agile fleet management, and enterprise wide cost controls helped to sustain margins in this dynamic environment.”

"The 2025 operating landscape is still lacking good clarity. We are monitoring industry opportunities and believe the diversity of our business model, asset optimisation and prudent investments will allow us to navigate local market pressure again this year, while capitalising on incremental new mega project starts. Long term, we expect new government policies and spending initiatives will expand opportunities for Herc and our industry.”

“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. Over the course of the quarter, we 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."

Vertikal Comment

Another strong performance from Herc, which is doing a lot of things well and on track for further growth this year. The only downside is the size of its debt pile, which although perfectly manageable is costing more in interest payments. It also seems to have a policy of aging the fleet a little, not a great idea when uncertainties loom.

In spite of this the future remains bright, expect further growth this year regardless.