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].

Core Viewpoint - The analysis compares Herc Holdings (HRI) and Westinghouse Air Brake Technologies (WAB) to determine which stock is more attractive to value investors, highlighting HRI as the superior option based on valuation metrics [1][6]. Valuation Metrics - HRI has a forward P/E ratio of 18.42, while WAB has a forward P/E of 21.82, indicating HRI is more attractively priced [5]. - HRI's PEG ratio is 1.40, compared to WAB's PEG ratio of 1.50, suggesting HRI offers better value relative to its expected earnings growth [5]. - HRI's P/B ratio is 2.18, whereas WAB's P/B ratio is 3.06, further supporting HRI's stronger valuation profile [6]. Earnings Outlook - Both HRI and WAB currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks for both companies [3].

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]