Herc Holdings(US:HRI)2025-10-28 10:32Financial 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].