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Financial Data and Key Metrics Changes - For Q3 2025, equipment rental revenue increased approximately 30% year-over-year, driven by the acquisition of H&E Equipment Services Inc. and strong contributions from mega projects and specialty solutions [23] - Adjusted EBITDA rose 24% compared to the previous year's third quarter, benefiting from higher equipment rental revenue and used equipment sales [23] - Net income for the third quarter included $38 million of transaction costs related to the acquisition, with adjusted net income at $74 million [25] Business Line Data and Key Metrics Changes - Local accounts represented 52% of rental revenue, down from 53% a year ago on a pro forma basis, while national accounts continue to show robust private funding for large-scale projects [14] - The company is focusing on optimizing its fleet management and has made significant progress in disposing of underutilized and aged equipment [19][20] Market Data and Key Metrics Changes - The industrial spending forecast indicates strong capital and maintenance spending through the end of the decade, with non-residential construction starts in 2025 estimated at $467 billion, a 4% increase year-over-year [16] - The mega project pipeline is projected to exceed $650 billion for 2025, indicating significant growth opportunities in the construction sector [16][17] Company Strategy and Development Direction - The company is prioritizing the integration of H&E Equipment Services Inc. and has paused other M&A initiatives to focus on achieving cost and revenue synergies [10] - Plans include consolidating general rental branches and expanding specialty equipment locations, aiming for a 25% increase in specialty network next year [9][11] Management's Comments on Operating Environment and Future Outlook - Management noted that while local market growth is limited due to high interest rates, robust activity in mega projects continues to drive demand [4][14] - The company remains confident in its ability to deliver full value from the acquisition and achieve long-term growth strategies [10][12] Other Important Information - The company completed a full systems integration in just 90 days, significantly faster than the typical timeline for similar-sized companies [6] - The integration allows for real-time visibility into performance metrics and operational KPIs, enhancing decision-making capabilities [7][8] Q&A Session Summary Question: What is the status of the fleet right-sizing process? - The heavy lifting was completed in Q3, with more work expected in Q4, aiming to close this part of the process by the end of the year [31][33] Question: How does the mix of national accounts impact margins? - Management does not expect significant margin dilution from national accounts or mega projects, as these projects typically involve minimal movement and higher volumes of specialty products [35][36] Question: Can you clarify the consolidation of general rental locations? - The strategy involves opening specialty businesses within general rental branches rather than closing them, with plans for 50 new specialty locations [38] Question: Are there updates on cost and revenue synergies? - Cost synergy targets are evolving, with ongoing efficiency reviews now that the companies are on the same platform [40] Question: How is customer attrition being managed post-acquisition? - Customer attrition has stabilized, and efforts are being made to engage with former H&E Equipment Services Inc. customers to regain business [44][61]

Financial Data and Key Metrics Changes - For Q3 2025, equipment rental revenue increased approximately 30% year-over-year, driven by the acquisition of H&E and strong contributions from mega projects and specialty solutions [23] - Adjusted EBITDA rose 24% compared to the previous year's third quarter, benefiting from higher equipment rental revenue and used equipment sales [23] - Adjusted net income for the quarter was $74 million, with $38 million in transaction costs related to the H&E acquisition included in the net income [25] Business Line Data and Key Metrics Changes - The company completed a full systems integration in just 90 days, which is significantly faster than the typical timeline of six to 18 months for similar-sized companies [6] - The focus on fleet management included disposing of underutilized and aged equipment, with gross CapEx expected to be between $900 million and $1.1 billion for 2025 [19] - The company plans to consolidate some general rental branches to improve operational efficiencies, expecting to add about 50 specialty locations, increasing the specialty network by 25% next year [9] Market Data and Key Metrics Changes - Local accounts represented 52% of rental revenue, down from 53% a year ago, indicating a slight shift in market dynamics [14] - The company is targeting a long-term revenue split of 60% local and 40% national accounts, which provides growth and resiliency [15] - The industrial spending forecast indicates strong capital and maintenance spending through the end of the decade, with non-residential construction starts estimated at $467 billion for 2025, a 4% increase year-over-year [16] Company Strategy and Development Direction - The integration of H&E is the primary focus, with other M&A initiatives paused to ensure successful integration and realization of synergies [10] - The company aims to capitalize on the shift from ownership to rental, particularly in the specialty market, and is increasing its gross CapEx plans towards specialty equipment [11] - Diversification into new end markets and products has reduced reliance on a single industry, enhancing resilience to downturns [22] Management Comments on Operating Environment and Future Outlook - Management noted that while local market demand is affected by high interest rates, mega project activity remains robust, indicating a bifurcated demand environment [4] - The company expects continued growth in national accounts and specialty solutions, with plans to optimize fleet mix and geography to support this momentum [21] - Management remains confident in achieving both revenue and cost synergies over the next three years, despite the challenges posed by the integration process [28] Other Important Information - The company generated $342 million of free cash flow in the nine months ended September 30, 2025, aligning with expectations [26] - The current leverage ratio stands at 3.8x, with a goal to return to a target range of two to three times by the end of 2027 [26] - The company has onboarded 2,500 new team members into its health and safety program, emphasizing a strong commitment to safety [13] Q&A Session Summary Question: What is the status of the fleet right-sizing process? - Management indicated that significant progress was made in Q3, with more work expected in Q4, aiming to close this process by the end of 2026 [31][33] Question: How does the mix of national accounts impact margins? - Management stated that they do not expect significant margin dilution from national accounts or mega projects, as these projects typically involve minimal movement and higher volumes of specialty products [36] Question: Can you clarify the consolidation of general rental locations? - Management clarified that the strategy involves opening specialty businesses within general rental branches rather than closing them, aiming for a net increase in specialty locations [39] Question: Are there updates on cost and revenue synergies? - Management noted that cost synergy targets are evolving, and efficiency reviews are ongoing now that the integration is complete, which will contribute to incremental margins [41] Question: How is customer attrition being managed post-acquisition? - Management reported stabilization in the sales organization and is focusing on re-engaging customers, with positive early signs of revenue synergies from introducing specialty products to former H&E customers [62]

Financial Data and Key Metrics Changes - For the third quarter of 2025, equipment rental revenue increased approximately 30% year over year, driven by the acquisition of H&E Equipment Services Inc. and strong contributions from mega projects and specialty solutions [25] - Adjusted EBITDA rose 24% compared to the previous year's third quarter, benefiting from higher equipment rental revenue and used equipment sales [25] - Net income for the third quarter included $38 million of transaction costs related to the H&E Equipment Services Inc. acquisition, with adjusted net income at $74 million [26] Business Line Data and Key Metrics Changes - The company completed a full systems integration within 90 days, significantly faster than the typical timeline of six to 18 months for similar-sized companies [6][8] - The focus on fleet management included disposing of underutilized and aged equipment, with a goal of optimizing the fleet to match demand patterns [10][20] - The company expects to consolidate some general rental branches for cost and operational efficiencies, resulting in about 50 additional specialty locations, increasing the specialty network by 25% next year [10][12] Market Data and Key Metrics Changes - Local accounts represented 52% of rental revenue compared to 53% a year ago, indicating a slight shift in revenue sources [16] - The company is targeting a long-term revenue split of 60% local and 40% national, which provides growth and resiliency [17] - Industrial spending is projected to remain strong, with non-residential construction starts estimated at $467 billion for 2025, a 4% increase year over year [18] Company Strategy and Development Direction - The integration of H&E Equipment Services Inc. is the primary focus, with other M&A initiatives paused to ensure successful integration [11] - The company aims to capitalize on the shift from ownership to rental, particularly in the specialty market, and is increasing gross CapEx plans towards specialty equipment [12][13] - The strategy includes optimizing the branch network and enhancing customer-facing technology to improve service levels and operational efficiency [10][12] Management's Comments on Operating Environment and Future Outlook - Management noted that while local market growth is limited due to high interest rates, robust activity continues in mega projects and specialty solutions [4][16] - The company remains confident in achieving full revenue and cost synergies over the next three years, despite the ongoing integration challenges [30] - Management highlighted the importance of safety and operational efficiency, with a commitment to maintaining high standards across the organization [15][16] Other Important Information - The company generated $342 million of free cash flow in the nine months ended September 30, 2025, aligning with expectations [27] - The current leverage ratio stands at 3.8 times, with a goal to return to a target range of two to three times by year-end 2027 [27] Q&A Session Summary Question: What is the status of the fleet right-sizing process? - Management indicated that significant progress was made in Q3, with expectations to complete the right-sizing in Q4, depending on the economic landscape for 2026 [32][35] Question: How does the mix of national accounts impact margins? - Management stated that they do not expect significant margin dilution from national accounts or mega projects, as these projects typically involve minimal movement of equipment and higher volumes [36][39] Question: Can you clarify the consolidation of general rental locations? - Management explained that the strategy involves opening specialty businesses within general rental branches rather than closing them, aiming for a net increase in specialty locations [41] Question: Are there updates on cost and revenue synergies? - Management confirmed that while initial synergy targets may evolve, they are focused on efficiency reviews and believe there will be incremental margin improvements [43][45] Question: How is customer retention and pricing being managed post-acquisition? - Management reported stabilization in attrition rates and is working on improving pricing for H&E Equipment Services Inc. customers to align with Herc's historical performance [57][61]

Core Insights - Herc Holdings (HRI) reported quarterly earnings of $2.22 per share, exceeding the Zacks Consensus Estimate of $1.83 per share, but down from $4.35 per share a year ago, indicating an earnings surprise of +21.31% [1] - The company generated revenues of $1.3 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.12% and showing a significant increase from $965 million year-over-year [2] - The stock has underperformed, losing approximately 29.6% since the beginning of the year, compared to a 16.9% gain in the S&P 500 [3] Earnings Performance - Over the last four quarters, Herc Holdings has surpassed consensus EPS estimates two times and topped revenue estimates three times [2] - The current consensus EPS estimate for the upcoming quarter is $2.23, with expected revenues of $1.34 billion, and for the current fiscal year, the estimate is $6.32 on $4.46 billion in revenues [7] Market Outlook - The company's earnings outlook is crucial for investors, as it reflects current consensus expectations and any recent changes [4] - The Zacks Rank for Herc Holdings is currently 4 (Sell), indicating expectations of underperformance in the near future [6] - The Transportation - Equipment and Leasing industry, to which Herc Holdings belongs, is ranked in the top 26% of Zacks industries, suggesting a favorable industry outlook [8]

Scaling for Sustainable Growth Q3 2025 EARNINGS CONFERENCE CALL October 28, 2025 Herc Rentals Team and Agenda President & Chief Executive Officer Q&A Larry Silber Aaron Birnbaum Senior Vice President & Chief Operating Officer Mark Humphrey Senior Vice President & Chief Financial Officer Leslie Hunziker Senior Vice President Investor Relations, Communications & Sustainability Agenda Safe Harbor Q3 2025 Overview Q3 Operations Review Q3 Financial Review 2025 Outlook Herc Holdings Inc. NYSE: HRI Q3 2025 2 Safe ...

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].