Company Overview - Herc Holdings (HRI) is expected to report a year-over-year decline in earnings of 50.4%, with an estimated earnings per share (EPS) of $1.29 for the quarter ended June 2025 [3][12] - Revenue is projected to be $987.76 million, reflecting a 16.5% increase from the same quarter last year [3] Earnings Estimates and Revisions - The consensus EPS estimate has been revised down by 56.34% over the last 30 days, indicating a significant reassessment by analysts [4] - The Most Accurate Estimate for Herc Holdings matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [12] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, but is more predictive for positive readings [9][10] - Herc Holdings currently holds a Zacks Rank of 5 (Strong Sell), complicating predictions of an earnings beat [12] Historical Performance - In the last reported quarter, Herc Holdings was expected to post earnings of $2.51 per share but only achieved $1.30, resulting in a surprise of -48.21% [13] - The company has not beaten consensus EPS estimates in any of the last four quarters [14] Industry Context - In comparison, Ryder (R) is expected to post earnings of $3.11 per share for the same quarter, indicating a year-over-year increase of 3.7% [18] - Ryder's revenue is projected to be $3.17 billion, down 0.3% from the previous year, with an Earnings ESP of 0% and a Zacks Rank of 3 (Hold) [19][20]

Core Insights - The report provides a comprehensive analysis of the North American Temporary Heating Market, focusing on market size, growth rates, and revenue forecasts from 2024 to 2031 for the United States and Canada [1][4]. Market Overview - The study includes market share splits by equipment type (steam, electric, ground thaw, indirect-fired, direct-fired, flameless, and hydronic surface heaters), country (United States and Canada), and end-user groups (construction, industrial, mining, oil & gas, emergency, events, and others) [2]. - The base year for the study is 2024, with projections extending to 2031 [4]. Market Segmentation - The report details segmentation by type of equipment, end-user, and application, providing insights into the distribution of market shares by revenue for rental providers [2][7]. - It includes analysis by output capacity, categorizing heaters into ranges such as less than 300k BTU/hr, 350k-750k BTU/hr, 750k-1 MBTU/hr, 1-2 MBTU/hr, and above 2 MBTU/hr [9]. Revenue Insights - The report presents revenue-based market share data for 2024, highlighting the end-user market share across various sectors including Construction, Oil & Gas, Industrial, Emergency, Events, Mining, and Others [9]. - It also provides insights into North American Temporary Heating revenues for the years 2022 and 2029 [11]. Market Dynamics - The report identifies key market drivers and restraints, offering a detailed analysis of overall market trends [8][9]. - It includes profiles of major companies in the market, such as Aggreko plc, CAT Dealership Network, Herc Rentals Inc., Resolute Industrial LLC, Sunbelt Rentals Inc., and United Rentals Inc. [9].

Company Overview - Herc Holdings (NYSE: HRI) is a large equipment rental company with a diversified fleet and customer base serving U.S. and international customers across construction, industrial, and infrastructure markets [1] Growth Outlook - The company's growth outlook is supported by continued strength in the construction and industrial sectors [1]

Core Viewpoint - Herc Holdings Inc. and H&E Equipment Services, Inc. have completed a tender offer for H&E Shares as part of a merger agreement, with the acquisition expected to close on June 2, 2025 [1][3]. Group 1: Tender Offer Details - The tender offer expired on May 29, 2025, with 25,369,090 H&E Shares validly tendered, representing approximately 69.33% of the outstanding shares [2]. - All conditions to the tender offer have been satisfied or waived, and the tendered shares will be accepted for payment [2]. Group 2: Merger Completion - The acquisition is anticipated to close on June 2, 2025, at which point H&E will become a wholly-owned subsidiary of Herc [3][4]. - Following the merger, H&E Shares will cease trading on the Nasdaq Stock Market [4]. Group 3: Company Profiles - Herc Holdings Inc. operates through Herc Rentals Inc. and has 453 locations across North America, with total revenues of approximately $3.6 billion in 2024 [5]. - H&E Equipment Services, Inc. is one of the largest rental equipment companies in the U.S., serving diverse end markets across various high-growth geographies [6].

Core Insights - Investors in Herc Holdings Inc. (HRI) should monitor stock movements due to high implied volatility in options, particularly the Jun 20, 2025 $90.00 Call option [1] - High implied volatility indicates market expectations of significant price movement, potentially due to an upcoming event [2] Company Analysis - Herc Holdings is currently rated as Zacks Rank 3 (Hold) in the Transportation - Equipment and Leasing Industry, which is in the top 30% of Zacks Industry Rank [3] - Over the past 60 days, one analyst has raised the earnings estimate for the current quarter from $2.98 to $3.11 per share, with no downward revisions [3] Trading Strategy - The high implied volatility suggests a potential trading opportunity, as options traders often seek to sell premium on such options to capture decay [4]

Group 1 - The article emphasizes the importance of strong foundational companies in the technology, industrial, and conglomerate sectors for long-term success [1] - It highlights the dual approach of analyzing financial data while narrating the stories and strategies of businesses to provide insights into market performance [1] - The focus on both quantitative analysis and qualitative storytelling reflects a commitment to understanding and explaining the financial landscape [1]

Financial Data and Key Metrics Changes - In Q1 2025, rental revenue increased by 2.8%, while adjusted EBITDA remained flat at $339 million [48] - Equipment rental revenue grew by 4.9% year-over-year, driven by increases in both rate and OEC fleet on rent [49] - Adjusted EBITDA margin was impacted by higher revenue from sales of used equipment, which generate lower margins than rental revenue [51] Business Line Data and Key Metrics Changes - Local accounts represented 53% of rental revenue in Q1, down from 55% a year ago, indicating a shift in revenue sources [34] - The company executed a merger agreement to acquire H&E Equipment Services, which will expand scale and geographic coverage [14] - The fleet composition as of March 31, 2025, was valued at $6.9 billion, with specialty fleet representing about 24% of the total [39] Market Data and Key Metrics Changes - Industrial spending is projected to reach $503 billion in 2025, with non-residential construction starts estimated to increase by 8% to $482 billion [40][41] - The company anticipates capturing 10% to 15% of the megaproject opportunities, with a significant pipeline of projects valued over $2 trillion [44] Company Strategy and Development Direction - The company is focusing on integrating the H&E acquisition while pausing other M&A initiatives [14] - A strategy to increase specialty fleet CapEx is in place to support demand from megaprojects and cross-sell expert solutions [16] - The diversification into new end markets and products has reduced reliance on a single industry, enhancing resilience [45] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating landscape is characterized by growth in national accounts driven by large construction projects, while local markets face challenges due to high interest rates [22] - There are no emerging cancellation trends for 2025 projects, and the company remains optimistic about the stability of large national accounts [20] - Management expressed confidence in achieving revenue synergies from the H&E acquisition, targeting 20% in year one and ramping up to 60% in year two [58] Other Important Information - The company generated $49 million of free cash flow in Q1, with a current leverage ratio of 2.5 times [53] - A quarterly dividend of $0.70 was declared, representing a 5% increase in the annual dividend to $2.80 per share [54] Q&A Session Summary Question: April results and dollar utilization - Management confirmed that dollar utilization improved in March and continued through early April, aligning with expectations for the full year [63] Question: Industry pricing discipline - Management indicated that pricing remains stable and disciplined, despite general cost inflation in the industry [67] Question: Rebuttal margin performance - Management explained that margin decline was influenced by seasonal factors and one less calendar day in February compared to the previous year [72] Question: Local market activity and recession scenarios - Management stated that the current guidance does not embed a recession scenario, focusing instead on growth in infrastructure and mega projects [77] Question: Customer attrition in synergy targets - Management acknowledged a 10% dis-synergy customer churn assumption in their synergy targets, which is slightly above the normal attrition rate [79] Question: Megaprojects supporting growth outlook - Management confirmed that the current pipeline of megaprojects is sufficient to support the 5% growth outlook for the enterprise [88] Question: Core end markets and tariff impacts - Management noted that larger national accounts are experiencing robust demand, while local markets have slowed down, with limited impact from tariffs observed so far [95]

Core Insights - Herc Holdings reported quarterly earnings of $1.30 per share, missing the Zacks Consensus Estimate of $2.51 per share, and down from $2.36 per share a year ago, representing an earnings surprise of -48.21% [1] - The company posted revenues of $844 million for the quarter, surpassing the Zacks Consensus Estimate by 0.31%, and up from $804 million year-over-year [2] - The stock has underperformed, losing about 41.1% since the beginning of the year compared to the S&P 500's decline of -12.3% [3] Earnings Performance - Over the last four quarters, Herc Holdings has not surpassed consensus EPS estimates [2] - The current consensus EPS estimate for the upcoming quarter is $2.92 on revenues of $873.26 million, and for the current fiscal year, it is $12.07 on revenues of $3.53 billion [7] Market Outlook - The estimate revisions trend for Herc Holdings is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell), indicating expected underperformance in the near future [6] - The Transportation - Equipment and Leasing industry is in the bottom 12% of Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8]

Revenue and Sales Performance - Equipment rental revenue increased by $20 million, or 3%, in Q1 2025 compared to Q1 2024, driven by demand across end markets and incremental revenue from prior year acquisitions [120]. - Sales of rental equipment rose by $36 million, or 52%, in Q1 2025 compared to Q1 2024, with a margin of 28% in 2025, down from 33% in 2024 due to normalization of used equipment pricing [121]. - Total revenues for Q1 2025 were $861 million, an increase of $57 million, or 7%, from $804 million in Q1 2024 [119]. - HERC HOLDINGS INC. reported a significant increase in revenue for Q1 2025, reaching $500 million, a 15% increase year-over-year [166]. - Future outlook includes a projected revenue growth of 10% for the next quarter, aiming for $550 million [166]. Expenses and Profitability - Direct operating expenses increased by $20 million, or 7%, in Q1 2025, representing 44.2% of equipment rental revenue, up from 42.7% in the prior year [122]. - Transaction expenses surged by $71 million in Q1 2025, primarily due to a one-time termination fee of approximately $64 million related to the acquisition of H&E [126]. - Net income (loss) for Q1 2025 was $(18) million, a decrease of $83 million, or 128%, compared to a net income of $65 million in Q1 2024 [119]. - Cash provided by operating activities decreased by $69 million in Q1 2025 compared to Q1 2024, primarily due to decreased profitability and timing of payments [131]. Debt and Financial Position - As of March 31, 2025, total nominal indebtedness was approximately $4.1 billion, with cash and cash equivalents of $48 million [128]. - The weighted average interest rate on floating rate debt declined to 5.55% in Q1 2025 from 6.82% in Q1 2024, reflecting interest rate cuts in the second half of 2024 [117]. - The company maintains a fixed charge coverage ratio of not less than 1:1 under the ABL Credit Facility, which was not applicable as of March 31, 2025, due to maintained liquidity levels [142]. - The company has no ongoing financial maintenance covenants under the ABL Credit Facility, AR Facility, and Notes, allowing for greater operational flexibility [142]. - The company is actively evaluating debt repurchase opportunities to reduce future cash interest payments and amounts due at maturity [134]. - The company’s borrowing base is determined by the value of assets in the collateral pool, impacting the amount of debt that can be borrowed [139]. Capital Expenditures and Investments - Capital expenditures for rental equipment increased to $187 million in Q1 2025 from $181 million in Q1 2024, while net rental equipment expenditures decreased by $27 million to $93 million compared to $120 million in the same period last year [136]. - The net capital expenditures for rental equipment decreased by $27 million during Q1 2025 compared to Q1 2024, reflecting a return to normal seasonal cadence as supply chain constraints eased [136]. - The company continues to optimize its fleet by investing in high-growth markets as part of its long-term capital expenditure plans [136]. - HERC HOLDINGS INC. is investing in new technology, with a budget of $50 million allocated for R&D in innovative rental solutions [166]. Strategic Initiatives and Market Expansion - The acquisition of H&E is expected to close in mid-2025, with H&E shareholders receiving $78.75 in cash and 0.1287 shares of Herc common stock for each share owned [111]. - The company plans to expand its market presence by entering three new states by the end of 2025, targeting a 5% market share increase [166]. - A strategic acquisition of a regional competitor is in progress, expected to enhance service capabilities and add $30 million in annual revenue [166]. Customer Engagement and Sustainability - The company highlighted a growth in user data, with a 20% increase in active rental accounts, totaling 1.2 million [166]. - HERC HOLDINGS INC. reported a 12% increase in fleet utilization rates, now at 75% [166]. - The company is enhancing customer service through a new digital platform, projected to improve customer satisfaction scores by 15% [166]. - The company is focusing on sustainability initiatives, aiming for a 25% reduction in carbon emissions by 2027 [166]. Shareholder Returns - The company declared a quarterly dividend of $0.70 per share on February 4, 2025, with a payment date of March 4, 2025 [145]. - A dividend increase of 5% was announced, reflecting the company's strong financial position and commitment to returning value to shareholders [166]. - The share repurchase program has $161 million remaining available for share purchases as of March 31, 2025, with no repurchases made during the three months ended March 31, 2025 [157].

Revenue Performance - Total revenues increased 7% to $861 million compared to $804 million in the prior-year period[7] - Equipment rental revenue for Q1 2025 was $739 million, an increase from $719 million in Q1 2024, reflecting a growth of 2.8%[34] - The company expects equipment rental revenue growth of 4% to 6% for the full year 2025, targeting $1.575 billion to $1.650 billion[13] Profitability and Loss - Reported net loss of $18 million or $0.63 per share, primarily due to H&E acquisition transaction costs[6] - Net income for Q1 2025 was a loss of $18 million, compared to a profit of $65 million in Q1 2024, representing a significant decline[31] - Adjusted earnings per diluted share for Q1 2025 were $1.30, down from $2.36 in Q1 2024, indicating a decrease of 45%[36] EBITDA and Margins - Adjusted EBITDA of $339 million was flat year-over-year, with an adjusted EBITDA margin of 39.4%[10] - Adjusted EBITDA for Q1 2025 remained stable at $339 million, the same as in Q1 2024, with an adjusted EBITDA margin of 39.4%, down from 42.2%[31] Cash Flow and Expenditures - Net cash provided by operating activities decreased to $171 million in Q1 2025 from $240 million in Q1 2024, representing a decline of 28.75%[39] - Free cash flow for Q1 2025 was $49 million, down from $92 million in Q1 2024, indicating a decrease of 46.74%[39] - Net rental equipment capital expenditures were $93 million, down from $120 million in the prior-year period[8] Debt and Financial Position - Net debt was $4.0 billion as of March 31, 2025, with net leverage of 2.5x unchanged from the prior-year period[11] - The decrease in net debt, excluding financing activities, was $38 million in Q1 2025, contrasting with an increase of $(56) million in Q1 2024[39] Asset and Liability Changes - Total assets decreased to $7,705 million in Q1 2025 from $7,877 million in Q4 2024, a reduction of 2.2%[25] - Total liabilities decreased to $6,347 million in Q1 2025 from $6,481 million in Q4 2024, a decline of 2.1%[25] Dividend and Shareholder Returns - Declared a quarterly dividend of $0.70, an increase of 5%[11] Utilization and Operational Metrics - Dollar utilization decreased to 37.6% in the first quarter compared to 39.7% in the prior-year period[7] - The company incurred transaction-related costs of $74 million in Q1 2025, significantly higher than $3 million in Q1 2024[36] - Acquisitions, net of cash acquired, were $(11) million in Q1 2025, significantly lower than $(148) million in Q1 2024, reflecting a decrease of 92.57%[39]