Financial Performance - Total revenues for the nine months ended September 30, 2025, reached $3.167 billion, a 21% increase from $2.617 billion in the same period of 2024[164]. - Net income for Q3 2025 was $30 million, a decrease of 75% compared to $122 million in Q3 2024[164]. - Cash provided by operating activities decreased by $124 million to $770 million in the nine months ended September 30, 2025, compared to $894 million in the same period in 2024[188]. Revenue and Expenses - Equipment rental revenue increased by $256 million, or 30%, in Q3 2025 compared to Q3 2024, reflecting the impact of the H&E acquisition[165]. - Direct operating expenses rose by $133 million, or 40%, in Q3 2025, accounting for 41.6% of equipment rental revenue compared to 38.6% in Q3 2024[167]. - Selling, general and administrative expenses rose by $46 million, or 38%, in Q3 2025, representing 14.8% of equipment rental revenue compared to 13.9% in Q3 2024[171]. - Direct operating expenses increased by $206 million, or 21%, in the nine months ended September 30, 2025, compared to the same period in 2024, representing 43.0% of equipment rental revenue[176]. - Selling, general and administrative expenses increased by $62 million, or 18%, in the nine months ended September 30, 2025, accounting for 15.0% of equipment rental revenue[178]. Acquisition Details - The acquisition of H&E Equipment Services was completed for a total purchase price of $4.8 billion, funded by $2.75 billion in Senior Notes and $750 million in a Term Loan Facility[160]. - The acquisition of H&E was completed on June 2, 2025, and is currently being integrated into the company's internal control over financial reporting[209]. - The anticipated benefits and synergies from the H&E acquisition may take longer to realize than expected, which could adversely affect the company's financial results[215]. - Integration of H&E may be difficult, costly, and time-consuming, with potential risks impacting the realization of expected synergies and benefits[216]. Debt and Interest - Interest expense increased by $65 million, or 94%, in Q3 2025, due to new debt facilities issued at a weighted average effective interest rate of 6.8%[172]. - Interest expense increased by $89 million, or 46%, during the nine months ended September 30, 2025, due to new debt facilities issued for the H&E acquisition at a weighted average effective interest rate of 6.8%[181]. - As of September 30, 2025, total nominal indebtedness outstanding was approximately $8.2 billion[182]. Cash Flow and Investments - Cash used in investing activities increased by $3,551 million to $4,794 million during the nine months ended September 30, 2025, primarily due to the cash portion of the H&E acquisition[189]. - Financing activities generated $4,002 million during the nine months ended September 30, 2025, significantly higher than $420 million in the prior year, mainly from new debt issuance[190]. Shareholder Actions - The company declared a quarterly dividend of $0.70 per share on August 8, 2025, with a payment date of September 5, 2025[201]. - The company has a remaining approximate dollar value of $161 million available for share repurchases under its $1 billion share repurchase program as of September 30, 2025[221]. - The company has not repurchased any shares during the nine months ended September 30, 2025[221]. Internal Controls and Risks - There were no changes in internal control over financial reporting during the quarter ended September 30, 2025, that materially affected the internal controls[210]. - The company has excluded the H&E acquisition from its evaluation of disclosure controls and procedures for the nine months ended September 30, 2025[209]. - The company is evaluating existing controls and procedures of H&E as part of the integration process[209]. - The company faces various risks and uncertainties related to the integration of H&E, including management attention diversion and customer retention[217].

Revenue and Income - Equipment rental revenue for Q3 2025 was $1,122 million, a 30% increase year-over-year[6] - Total revenues for Q3 2025 reached $1,304 million, up 35% from $965 million in the prior-year period[7] - Net income for Q3 2025 was $30 million, or $0.90 per diluted share, while adjusted net income was $74 million, or $2.22 per diluted share[6] - Equipment rental revenue for Q3 2025 was $1,122 million, up 29.5% from $866 million in Q3 2024[28] - Total revenues for the nine months ended September 30, 2025, reached $3,167 million, a 21.0% increase compared to $2,617 million for the same period in 2024[28] - Adjusted net income for Q3 2025 was $74 million, compared to $124 million in Q3 2024, reflecting a decrease of 40.3%[39] - Adjusted earnings per diluted share for Q3 2025 was $2.22, down from $4.35 in Q3 2024, representing a decline of 48.9%[39] EBITDA and Margins - Adjusted EBITDA for Q3 2025 was $551 million, reflecting a 24% increase with an adjusted EBITDA margin of 42%[6] - Adjusted EBITDA for Q3 2025 was $551 million, representing an adjusted EBITDA margin of 42.3%, compared to 46.2% in Q3 2024[36] Assets and Liabilities - As of September 30, 2025, the total fleet value was approximately $9.6 billion, with an average fleet size increase of 38% year-over-year[16] - Total assets increased to $13,927 million as of September 30, 2025, compared to $7,877 million at the end of 2024, reflecting significant growth[30] - Long-term debt rose to $8,164 million as of September 30, 2025, up from $4,069 million at the end of 2024[30] - Net debt as of September 30, 2025, was $8.2 billion, with a net leverage ratio of 3.8x[16] Cash Flow and Expenditures - Cash flows from operating activities for the nine months ended September 30, 2025, were $770 million, down from $894 million in the same period of 2024[32] - Free cash flow for the nine months ended September 30, 2025, was $133 million, a decrease of 38.9% from $218 million in the same period of 2024[46] - Total rental equipment expenditures for the nine months ended September 30, 2025, were $835 million, compared to $753 million in 2024, an increase of 10.9%[46] - Rental equipment expenditures for the nine months ended September 30, 2025, totaled $835 million, compared to $753 million in the same period of 2024[32] - The company reported a depreciation of rental equipment of $613 million for the nine months ended September 30, 2025, compared to $499 million in the same period of 2024[32] Operational Developments - The company completed the full IT integration of H&E Equipment Services, enhancing operational efficiencies[4] - The company opened 17 greenfield locations during the nine months ended September 30, 2025[16] - The company reaffirmed its 2025 full-year guidance for equipment rental revenue between $3.7 billion and $3.9 billion[19] Transaction Costs and Acquisitions - The company incurred transaction expenses of $185 million for the nine months ended September 30, 2025, compared to $9 million in the same period of 2024[28] - The company reported transaction-related costs of $38 million in Q3 2025, significantly higher than $3 million in Q3 2024[39] - The company incurred a loss of $4,256 million related to acquisitions, net of cash acquired, for the nine months ended September 30, 2025[46] - The impact of the fair value mark-up of acquired fleet contributed $7 million to adjusted net income in Q3 2025[39] Shareholder Returns - The company declared a quarterly dividend of $0.70 per share, paid on September 5, 2025[16] - The diluted shares outstanding increased to 33.3 million in Q3 2025 from 28.5 million in Q3 2024[39] Taxation - The tax impact of adjustments for Q3 2025 was a reduction of $13 million, reflecting a tax rate of 25.0%[42]

Core Insights - Herc Holdings reported a strong third quarter for 2025, with total revenues of $1,304 million, a 35% increase from $965 million in the prior year, driven by a 30% rise in equipment rental revenue [6][24] - The company completed the integration of H&E Equipment Services, enhancing operational efficiencies and positioning for long-term market share expansion [2][3] - Adjusted EBITDA for the quarter was $551 million, up 24% year-over-year, with an adjusted EBITDA margin of 42% [6][30] Financial Performance - Equipment rental revenue reached $1,122 million, a 30% increase compared to the previous year [6][24] - Direct operating expenses were $467 million, representing 41.6% of equipment rental revenue, up from 38.6% in the prior-year period [6][8] - Net income for the quarter was $30 million, down from $122 million in the prior-year period, while adjusted net income decreased 40% to $74 million [6][26] Operational Highlights - The company successfully completed the IT integration of acquired branches, allowing for unified operations across various platforms [3] - Dollar utilization was reported at 39.9%, down from 42.2% in the prior-year period, primarily due to lower utilization of the acquired fleet [6][8] - The company opened 17 new locations during the nine months ended September 30, 2025, contributing to its growth strategy [15] Strategic Initiatives - Herc Holdings reaffirmed its full-year 2025 guidance for equipment rental revenue and adjusted EBITDA, excluding the impact of the Cinelease divestiture [13][16] - The company completed the sale of its Cinelease studio entertainment business for $100 million, using proceeds to reduce debt [12][14] - The company aims to capture a larger share of the anticipated increase in construction spending in 2025 through fleet investment and optimization [16]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Herc Holdings (HRI) despite higher revenues, with a focus on how actual results compare to estimates [1][2]. Earnings Expectations - Herc Holdings is expected to report quarterly earnings of $2.38 per share, reflecting a year-over-year decrease of 45.3% [3]. - Revenues are projected to be $1.29 billion, which is an increase of 33.6% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 16.15% higher in the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Herc Holdings is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -15.97% [12]. Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - Stocks with a positive Earnings ESP and a solid Zacks Rank have historically produced a positive surprise nearly 70% of the time [10]. Historical Performance - In the last reported quarter, Herc Holdings had an earnings surprise of +44.96%, reporting earnings of $1.87 per share against an expectation of $1.29 [13]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [14]. Industry Comparison - Ryder, another company in the Zacks Transportation - Equipment and Leasing industry, is expected to report earnings of $3.56 per share, indicating a year-over-year increase of 3.5% [18]. - Ryder's revenues are expected to be $3.22 billion, up 1.7% from the previous year, but its consensus EPS estimate has been revised 1.2% lower [19].

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Company Overview - Herc Rentals is celebrating its 60th anniversary as the oldest public company in the equipment rental industry [1] - The company has been an independent public entity for over 9 years, employing over 10,000 individuals and operating more than 625 locations across 46 states and 5 Canadian provinces [1] - The addressable market for Herc Rentals in North America is approximately $87 billion and is expected to grow [1] Industry Dynamics - The equipment rental industry is experiencing a long-term shift from ownership to rental, which is a secular trend benefiting the market [1] - Herc Rentals is focused on sustaining a profitable growth trend and executing a strong growth strategy [1] Growth Strategy - The company has achieved above-market growth through investments in fleet expansion, new greenfield openings, and entry into the specialty marketplace [2] - Herc Rentals has completed over 50 mergers and acquisitions in the last 4.5 years, resulting in the addition of 113 locations [2]

Group 1 - Herc Holdings Inc. (NYSE: HRI) shares have underperformed in the current year despite winning the acquisition of H&E Equipment, indicating potential challenges in the market [1] - The investment group "Value In Corporate Events" focuses on identifying opportunities in major corporate events such as IPOs, mergers & acquisitions, and earnings reports, providing coverage of 10 significant events monthly [1] Group 2 - The article emphasizes the importance of actionable ideas in capitalizing on corporate events, suggesting a strategic approach to investment [1]

Summary of Herc Holdings Inc. FY Conference Call (September 11, 2025) Company Overview - Herc Holdings Inc. is the oldest public company in the equipment rental industry, celebrating its 60th anniversary. [1] - The company operates over 625 locations across 46 states and five Canadian provinces, employing over 10,000 people. [1] - The addressable market for Herc is approximately $87 billion and is expected to grow, driven by a shift from ownership to rental in the equipment sector. [1] Core Business Strategies - Herc has achieved above-market growth through fleet investments, new openings, and M&A, completing over 50 transactions in the last four and a half years, adding 113 locations. [2] - The recent acquisition of H&E Equipment Services Inc. added 165 locations, enhancing Herc's scale and capabilities in the mega project market. [2][3] - The company operates primarily in the top 100 Metropolitan Statistical Areas (MSAs) in North America, which helps mitigate recession risks. [3] Market Dynamics - Local markets are currently stable but have shown softness, primarily due to commercial activity influenced by interest rates. [5][6] - The mega project segment remains strong, with Herc aiming to participate in 10% to 15% of these projects. [7] - Geographic strength is noted in areas with fewer regulations, such as Texas and the Gulf, while the West Coast faces challenges in securing large projects. [8] Acquisition Insights - The integration of H&E Equipment Services Inc. is progressing well, with all locations expected to be fully operational on the Herc platform shortly. [3][16] - The acquisition is expected to yield $125 million in cost synergies over two years, with a current run rate indicating 50% achievement by year-end. [17] - The combined fleet will focus on increasing the specialty segment from 16% to a long-term target of 25%, enhancing margin profiles. [25] Financial Outlook - The leverage ratio post-acquisition is at 3.8, with expectations to return to a 2-3 times leverage profile by 2027. [19][21] - The company is prioritizing integration and optimizing the newly acquired branches before pursuing further acquisitions. [21] Future Market Trends - The equipment rental industry is expected to continue growing, with a secular trend favoring rental over ownership. [31] - Customers are increasingly seeking comprehensive solutions, including technology and efficiency in fleet management. [31] - The introduction of innovative products, such as battery storage power and load banks for data centers, is anticipated to drive future growth. [29] Conclusion - Herc Holdings Inc. is well-positioned to capitalize on market opportunities through strategic acquisitions, a focus on specialty equipment, and a robust approach to integration and capital efficiency. [1][17][31]

Financial Data and Key Metrics Changes - In the second quarter, rental revenue increased by 13.7% and adjusted EBITDA rose by 12.8% to $406 million [32] - The company recorded a net loss in the second quarter, which included $73 million of transaction costs related to the H and E acquisition and a $49 million loss on assets held for sale [32] - On an adjusted basis, net income was $56 million [32] Business Line Data and Key Metrics Changes - GAAP equipment rental revenue was up about 14%, but on a pro forma basis, rental revenue would have been down 2% year over year, primarily due to weakness in the film and TV vertical and a decline in the H and E business [35] - Excluding Cinelese, rental revenue from Herc legacy branches increased by 4%, reflecting strong mega project activity and positive results in both general rental and specialty product lines [35] Market Data and Key Metrics Changes - Local accounts represented 53% of rental revenue compared to 56% a year ago, while national account demand remains strong [20] - The company is targeting a 60% local and 40% national revenue split, which provides growth and resiliency [21] Company Strategy and Development Direction - The integration of H and E is the primary focus, with plans to pause other M&A initiatives for the time being [16] - The company aims to capitalize on the shift from ownership to rental, particularly in the specialty market, and is planning to repurpose general rental branches into ProSolutions facilities [17] - The company is targeting $350 million in gross revenue synergies over three years from the H and E acquisition [40] Management's Comments on Operating Environment and Future Outlook - Management noted that local markets are under pressure due to interest rate-sensitive commercial construction, while mega project activity remains robust [20] - The company has not experienced cancellations on mega projects, although delays are typical due to design revisions and regulatory reviews [21] - Management expressed confidence in achieving both revenue and cost synergies from the acquisition, with a target of 50% of the $125 million EBITDA run rate by year-end 2025 [40] Other Important Information - The company generated $270 million of free cash flow in the first half of the year, net of transaction costs [37] - The current leverage ratio is 3.8 times, with plans to bring it back into the target range of 2 to 3 times by 2027 [37] Q&A Session Summary Question: Comments on fleet setup and future CapEx - Management indicated that it is early in the integration process and adjustments will be made to right-size the H and E fleet [45] Question: Confidence in overcoming revenue dissynergies - Management noted that while there were initial workforce disruptions, stabilization has occurred since the acquisition [51] Question: Free cash flow guidance clarification - Management provided a baseline for free cash flow generation of 10% to 15% off the revenue base, considering the missing cash flow from H and E [60] Question: Pricing pressures for H and E - Management acknowledged pricing headwinds for H and E but noted that pricing contributed to revenue growth for Herc [63] Question: Cost synergies related to headcount - Management confirmed that a significant portion of the $125 million cost synergies is related to headcount reductions, which have been identified [67] Question: Revenue synergy from cross-selling specialty products - Management expressed optimism about early synergy wins and training for the sales team to enhance specialty product offerings [78]

Financial Data and Key Metrics Changes - In Q2 2025, rental revenue increased by 13.7% and adjusted EBITDA rose by 12.8% to $406 million [32] - The company recorded a net loss in Q2, which included $73 million of transaction costs related to the H and E acquisition and a $49 million loss on assets held for sale [32] - On an adjusted basis, net income was $56 million [32] Business Line Data and Key Metrics Changes - Excluding Cinelese, Herc legacy branches saw a 4% increase in rental revenue, driven by strong mega project activity and moderated growth in the local market [33] - H and E's rental revenue declined by approximately 15% due to workforce disruptions and limited product offerings [34] Market Data and Key Metrics Changes - Local accounts represented 53% of rental revenue in Q2, down from 56% a year ago, while national accounts remained strong [21] - The company is targeting a revenue split of 60% local and 40% national, which provides growth and resiliency [22] Company Strategy and Development Direction - The integration of H and E is the primary focus, with plans to pause other M&A initiatives temporarily [17] - The company aims to capitalize on the shift from ownership to rental, particularly in the specialty market, and to repurpose general rental branches into ProSolutions facilities [18] Management's Comments on Operating Environment and Future Outlook - Management noted that local markets are under pressure due to interest-sensitive commercial construction, while mega project activity remains robust [21] - The company has not experienced cancellations on mega projects, although delays are typical due to design revisions and regulatory reviews [22] Other Important Information - The company expects to generate equipment rental revenue of $3.7 billion to $3.9 billion in 2025, which includes six months of forecasted H and E results [39] - Adjusted EBITDA is projected to be between $1.8 billion and $1.9 billion, implying an adjusted EBITDA margin of 42% to 43% [40] Q&A Session Summary Question: Comments on fleet setup and future CapEx - Management indicated that it is early in the integration process and adjustments to the fleet will occur primarily in the latter half of 2025 [44][46] Question: Confidence in stabilizing revenue base post-acquisition - Management confirmed that they have stabilized the revenue base and are seeing synergies occur since the acquisition [50][51] Question: Timing of overseas sales and used market conditions - Management expects approximately $750 million in dispositions in the second half of the year, with the used equipment market stabilizing [54][55] Question: Free cash flow guidance and baseline for next year - Management anticipates free cash flow generation of 10% to 15% off the revenue base, with a pro forma basis suggesting $500 million to $600 million for the year [60] Question: Cost synergies related to headcount - A significant portion of the $125 million in cost synergies is related to headcount reductions, which have been identified and planned [66][68] Question: Revenue synergy from cross-selling specialty products - Early synergy wins are being tracked, with training for the sales team expected to be completed by early 2026 [78] Question: EBITDA outlook and impact of employee turnover - Management indicated that the transition period will require adjustments to the business, including rightsizing the fleet and workforce [96]