Herc Holdings announces strategic initiatives and capital allocation plan
Herc Holdings Inc.’s new strategic initiatives to accelerate the company’s rate of growth in rental revenue and in adjusted EBITDA.
“We are pleased with the progress we have made over the last five years as an independently traded public company and are now shifting into high gear to accelerate our growth and return to shareholders,” says Larry Silber, president and chief executive officer. “We have strong momentum and intend to invest in new locations and add to our fleet to enhance our urban density, while improving operating leverage and scale. We intend to increase market share through organic growth and mergers and acquisitions,” he adds.
“As we move into the next phase of our journey, we are committing to a capital allocation plan that balances our investment growth options between organic and acquisition growth. We also intend to enhance our returns to shareholders through the establishment of a quarterly dividend. We are well-positioned to execute our strategy and deliver value to all of our stakeholders,” he added.
The company outlined new strategic initiatives and set a three-year organic rental revenue goal of 12 percent to 15 percent compound annual growth from the midpoints of fiscal years 2021 through 2024. It also established an organic adjusted EBITDA goal of 17 percent to 20 percent on the same basis.
The initiatives include:
- Grow the core – increase rental equipment capital expenditures at existing locations, while expanding the branch network through new greenfield locations and acquisitions in select markets
- Expand specialty – invest in specialty fleet, with a target of 30 percent of total OEC by 2024, and grow the specialty network throughout North America
- Elevate technology – enhance the customer experience by enabling mobile solutions and improving fleet utilization tracking and logistics management
- Integrate ESG – advance toward newly established 2030 goals for sustainability
- Allocate capital – operate against disciplined investment parameters for organic growth, strategic mergers and acquisitions, and dividends
Guidance
The Company raised its full-year 2021 adjusted EBITDA guidance range, with the midpoint increasing 28 percent compared with 2020 results, and affirmed net rental equipment capital expenditures guidance.
In addition, the Company established guidance for the 2022 calendar year, with adjusted EBITDA increasing 25 percent from the midpoints of the 2021 and 2022 guidance ranges.
New capital allocation plan
“We are committed to delivering long-term sustainable value to shareholders with a balanced, disciplined and opportunistic approach to capital deployment. With our available liquidity, we plan to invest in organic growth and M&A, and inaugurate a quarterly dividend, the future growth of which will be in line with our long-term business performance,” said Silber.
The board of directors declared a quarterly dividend of $0.50 per share to shareholders of record on October 20, 2021, to be paid on November 4, 2021.
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