05.08.2025

Mixed Herc

US based Herc Rentals has published its first half results, with higher revenues but a pre-tax loss compared to a decent profit last year.

First half

Total revenues for the six months to the end of June were 13 percent higher than this time last year at $1.86 billion thanks to higher rental revenues, a jump in sales of new equipment as well as used equipment from the fleet ,and a one month contribution from the H&E acquisition.

Pre-tax profit
Last year’s $174 million profit was converted into a $54 million loss this year, due to higher interest costs, higher operating costs, higher depreciation and $147 of transaction costs, mostly related to the H&A acquisition. There was also a $49 write down on equipment held for sale.

Capital expenditure on rental equipment was $421 down 10 percent on the same period last year. As a result of the H&E acquisition and higher sales of used machines, the average age of the fleet was reduced from 47 to 46 months – back to 2023 levels for this point of the year. Net debt at the end of June almost doubled to $8.3 billion.

Second Quarter

Total revenues came in at $1.05 billion, an 18 percent jump on the same quarter last year, thanks to H&E Equipment, while last year’s pre-tax profit of $93 million was converted into a $46 million loss, due to the points raised for the first half.

Chief executive Larry Silber said: “The second quarter marked an important milestone for our company. On June 2nd, we completed the transaction to bring Herc Rentals and H&E Equipment Services together. This acquisition, the largest in the industry, will accelerate our strategy to deliver market leading growth and superior value creation by providing geographic and customer diversification, a substantially expanded footprint in key regions with economies of scale, and a larger fleet to strengthen our position as a premier rental company in North America.”

“With the merger now behind us, our focus is on integration, optimisation and ensuring delivery of the revenue and cost synergy targets we established. It has been only about 8 weeks since the close and I am pleased with the go-to-market collaboration, fleet sharing, and process alignment. The teams are working very well together, united in their shared commitment to our customers’ success and energised by the unique opportunity that our combined strengths represent.”

“While integration is off to a great start, of course there is a lot of work ahead. H&E’s performance was impacted by disruptions to the employee base during the acquisition bidding process and through the closing. Since taking over, we have stabilised that but dis-synergies had already resulted. Those, combined with the continued moderation in the interest rate sensitive commercial sector are factored into our new, combined outlook for 2025, which also incorporates offsetting strength in mega project activity and ongoing growth in our specialty solutions business.”

Vertikal Comment

Once again a mixed set of numbers from Herc, on the one hand it continues increase revenues at a cracking pace, but on the other hand the H&E acquisition is beginning to look less digestible than it did when Herc push United out of the way to secure the deal. Debt has doubled and the integration process sounds more challenging than anticipated.

Herc has yet to show that it has the experience and resources to integrate such a big organisation as H&E, something it will need to overcome if it is to keep up with Ashtead and United. It could do with the market bouncing back in the second half and remaining buoyant for two or three years while it full digests its acquired business.

But let’s see how the second half goes.