Herc Holdings reports third quarter and nine months 2021 results
Equipment rental revenue increased 29.2 percent to
The Company declared its first quarterly dividend of
The company reported net income of
"Our third quarter performance illustrates how Herc Rentals is shifting into high gear to capitalize on the benefits of operating leverage and scale that we discussed at our Investor Day," says Larry Silber, president and chief executive officer. "We achieved another record for total revenues and adjusted EBITDA in the third quarter of 2021. Total revenues increased 21 percent and adjusted EBITDA grew 25 percent compared to the same period last year. Dollar utilization was also a record 46 percent, enhanced by steady demand in our markets and a positive operating environment. Our long-term strategy is driving results and we are positioned for a record year in 2021."
2021 third quarter financial results
- Equipment rental revenue increased 29.2 percent to
$519.6 million compared to$402.3 million in the prior-year period. - Total revenues increased 20.5 percent to
$550.4 million compared to$456.7 million in the prior-year period. The year-over-year increase of$93.7 million was related primarily to an increase in equipment rental revenue of$117.3 million , partially offset by a decrease of$28.7 million in sales of rental equipment. - Pricing increased 2.8 percent compared to the same period in 2020.
- Dollar utilization increased to 46.0 percent compared to 37.6 percent in the prior-year period.
- Direct operating expenses (DOE) of
$225.9 million increased 33.4 percent compared to the prior-year period. The$56.5 million increase was primarily due to higher personnel-related costs and increases related to higher year-over-year volume such as delivery and freight, maintenance and re-rent expense. - Selling, general and administrative expenses (SG&A) increased 33.6 percent to
$81.5 million compared to$61.0 million in the prior-year period. The$20.5 million increase was primarily attributed to increases in selling expenses, including commissions and bonus incentives, and travel expenses as business travel returned to pre-pandemic levels. - Interest expense decreased to
$21.4 million compared to$22.4 million in the prior-year period. The decrease was primarily related to both lower interest rates and balances of the Company's ABL Credit Facility in 2021. - The income tax provision was
$23.8 million compared to$11.7 million for the prior-year period. The increase was driven primarily by the level of pre-tax income. - The Company reported net income of
$72.3 million compared to$39.9 million in the prior-year period. Adjusted net income was$72.7 million compared to$39.8 million in the prior-year period. - Adjusted EBITDA increased 25 percent to
$245.9 million compared to$196.7 million in the prior-year period. - Adjusted EBITDA margin increased 160 basis points to 44.7 percent compared to 43.1 percent in the prior-year period.
2021 nine months financial results
- Equipment rental revenue increased 22.5 percent to
$1,368 million compared to$1,116.4 million in the prior-year period. - Total revenues increased 18.6 percent to
$1,495.1 million compared to$1,260.9 million in the prior-year period. The year-over-year increase of$234.2 million was related primarily to an increase in equipment rental revenue of$251.6 million , partially offset by a decline in sales of rental equipment of$25.6 million . - Pricing increased 1.6 percent compared to the same period in 2020.
- Dollar utilization increased to 42.4 percent compared to 34.7 percent in the prior-year period.
- Direct operating expenses (DOE) of
$611.9 million increased 21.6 percent compared to the prior-year period. The$108.6 million increase was primarily due to higher personnel-related costs and increases related to higher volume such as delivery and freight expenses, maintenance and re-rent expense. - Selling, general and administrative expenses (SG&A) increased 17.8 percent to
$221.0 million compared to$187.6 million in the prior-year period. The$33.4 million increase was primarily attributed to selling expenses, including commissions and bonus incentives, general payroll and benefit increases including higher stock compensation expense, offset by a reduction in bad debt expense due to continued improvement in collections. - Interest expense decreased to
$63.8 million compared to$70.1 million in the prior-year period. The decrease was primarily related to both lower interest rates and balances of the Company's ABL Credit Facility in 2021. - The income tax provision was
$46.7 million compared to$10.9 million for the prior-year period. The provision in the nine months ended September 30, 2021 was primarily driven by the level of pre-tax income. - The Company reported net income of
$152.3 million compared to$38.2 million in the prior-year period. Adjusted net income was$153.6 million compared to$48.2 million in the prior-year period. - Adjusted EBITDA increased 29.3 percent to
$638.2 million compared to$493.7 million in the prior-year period. - Adjusted EBITDA margin increased 350 basis points to 42.7 percent compared to 39.2 percent in the prior-year period.
Capital expenditures
- The Company reported net rental equipment capital expenditures of
$360.9 million for the nine months of 2021. Gross rental equipment capital expenditures were$447.0 million compared to$273.2 million in the comparable prior-year period. Proceeds from disposals were$86.1 million compared to$114.1 million last year. See page A-5 for the calculation of net rental equipment capital expenditures. - As of September 30, 2021, the Company's total fleet was approximately
$4.1 billion at OEC. - Average fleet at OEC in the third quarter increased year-over-year by 4.3 percent compared to the prior-year period.
- Average fleet age was 48 months as of September 30, 2021 compared to 47 months in the comparable prior-year period.
Outlook
The Company affirmed its full year 2021 and 2022 guidance ranges of:
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"We shared our 2021 to 2024 annual goals for organic CAGR growth of 12 percent to 15 percent in rental revenue and 17 percent to 20 percent in adjusted EBITDA at our recent Investor Day," says Silber. "We have strong momentum and intend to invest in new locations, fleet and acquisitions to enhance our urban density and improve our operating leverage and scale. We are committed to a capital allocation plan that balances our investment growth options between organic and acquisition growth.
In addition, we are pleased to establish the payment of a quarterly dividend of
Subsequent event
The Company entered into a purchase agreement to acquire
PRO CONTRACTOR RENTALS MAGAZINE
Pro Contractor Rentals provides information of value to rental centers who focus time, resources and attention on meeting the demands of construction contractors and other equipment rental customers.
