Herc Holdings reports first quarter 2025 results and affirms 2025 full year guidance
Herc Holdings Inc. today reported financial results for the quarter ended March 31, 2025.
Q1 2025 highlights: record equipment rental revenue of $739 million, an increase of 3 percent; record total revenues of $861 million, an increase of 7 percent; reported net loss of $18 million or $0.63 per share driven primarily by the H&E acquisition transaction costs; adjusted EBITDA of $339 million was flat year-over-year with adjusted EBITDA margin of 39.4 percent.
“As expected, the 2025 operating landscape continues to be a tale of two disparate economic trends,” says Larry Silber, president and chief executive officer. “Our national account business is growing, fueled by federal and private funding for large construction projects like data centers, manufacturing onshoring and LNG facilities. At the same time, while facility maintenance, municipal and infrastructure projects are supporting the local markets, other more interest-rate sensitive projects continue to be on hold, restricting overall local account growth.
“Against this uneven backdrop, Herc’s diversified business model helps drive resiliency,” says Silber. “With growth in mega project activity and incremental revenue benefits from last year’s acquisitions, we delivered financial results that were in line with our expectations for the seasonally low first quarter. And we remain on pace to outperform the overall equipment rental market again this year as Team Herc continues to identify opportunities to deliver value for our customers, while managing our fleet and capital strategically and with discipline.
“As it relates to the H&E acquisition, with the closing date targeted for mid-year, our operators and salesforce remain focused on running the day-to-day business, and our integration team is actively preparing for the migration of Herc systems and processes. We are excited to bring together two strong cultures that focus on growth and share priorities for customer service and safety.”
2025 Q1 financial results
- Total revenues increased 7 percent to $861 million compared to $804 million in the prior-year period. The year-over-year increase of $57 million related to an increase in equipment rental revenue of $20 million, reflecting uneven demand across end markets and incremental revenue from prior-year greenfields and acquisitions. Sales of rental equipment increased by $36 million during the period.
- Dollar utilization decreased to 37.6 percent in the first quarter compared to 39.7 percent in the prior-year period.
- Direct operating expenses were $327 million, or 44.2 percent of equipment rental revenue, compared to $307 million, or 42.7 percent in the prior-year period. The increase as a percent of rental revenue related to lower fixed cost absorption due to the normal seasonality associated with the first quarter, particularly facilities costs due to greenfield and acquisition locations and higher insurance costs year-over-year.
- Depreciation of rental equipment increased 8 percent to $172 million due to higher year-over-year average fleet size. Non-rental depreciation and amortization increased 14 percent to $33 million primarily due to an increase in non-rental asset depreciation resulting from the growth of the business.
- Selling, general and administrative expenses were $118 million compared to $112 million in the prior-year period. As a percent of rental revenue, selling, general and administrative expenses were nearly flat year-over-year.
- Transaction expenses were $74 million compared to $3 million in the prior-year period. The increase related to costs incurred for the H&E acquisition, primarily a $64 million termination fee paid to United Rentals on behalf of H&E.
- Interest expense remained relatively flat at $62 million compared with $61 million in the prior-year period.
- Net loss was $18 million compared to net income of $65 million in the prior-year period. Adjusted net income decreased 45 percent to $37 million, or $1.30 per diluted share, compared to $67 million, or $2.36 per diluted share, in the prior-year period. The income tax provision in the first quarter was primarily driven by the non-deductible transaction costs related to the H&E acquisition.
- Adjusted EBITDA remained flat at $339 million and adjusted EBITDA margin was 39.4 percent compared to 42.2 percent in the prior-year period.
- As of March 31, 2025, the Company's total fleet was approximately $6.9 billion at OEC.
- Average fleet at OEC in the first quarter increased 9 percent compared to the prior-year period.
- Average fleet age was 47 months as of March 31, 2025 and 2024.
Disciplined capital management
- The company opened three new greenfield locations during the three months ended March 31, 2025.
- Net debt was $4.0 billion as of March 31, 2025, with net leverage of 2.5x unchanged from the same prior-year period. Cash and cash equivalents and unused commitments under the ABL Credit Facility contributed to approximately $1.9 billion of liquidity as of March 31, 2025.
- The Company declared its quarterly dividend of $0.70, an increase of 5% percent, paid to shareholders of record as of February 18, 2025 on March 4, 2025.
2025 outlook—excluding Cinelease
The company is affirming its full year 2025 equipment rental revenue growth, adjusted EBITDA, and gross and net rental capital expenditures guidance ranges, excluding Cinelease studio entertainment and lighting and grip equipment rental business. The sale process for the Cinelease studio entertainment business is ongoing and a transaction is expected to be completed in 2025.
As a leader in an industry where scale matters, the Company expects to continue to gain share by capturing an outsized position of the forecasted higher construction spending in 2025 by investing in its fleet, optimizing its existing fleet, capitalizing on strategic acquisitions and greenfield opportunities, and cross-selling a diversified product portfolio.
Learn more at www.HercRentals.com
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