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].

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].