Herc ‘significantly outpaced’ industry growth in Q3

Herc Rentals’ Q3 results exceeded previous expectations, confirming the company’s February forecast of outpacing industry growth.

“In the third quarter, we significantly outpaced overall industry growth on both a total rental revenue basis and from an organic revenue perspective,” said Larry Silber, president and chief executive officer. “By capitalizing on our broad end-market coverage, diversified product and services offering and expanding share in resilient urban markets, we continue to deliver strong volume and a solid price/mix performance.

Larry Silber, president and CEO, Herc Rentals. (Photo: Herc Rentals)

The company reported record equipment rental revenue of $866 million, marking a 13% year-over-year increase for the three months that ended Sept. 30, and total revenues of $965 million, a 6% rise for the same period.

“We increased third quarter rental revenue by 13% to a new quarterly record, primarily reflecting the continued robust growth from mega projects and contributions from our increased branch network and recent acquisitions,” Silber said. “This growth was achieved despite a tough year-over-year comparison and a challenging interest rate environment for local-project starts.

“As we manage the complexities of disparate levels of demand across geographies, end markets and project types, our team is agile and remains focused on aligning costs and balancing fleet, while continuing to support the growth of our business and deliver outstanding customer service.”

Herc Rentals looks to continue outpacing industry growth for 2024. (Photo: Herc Rentals)

The company, which reported a total of 439 locations as of Sept. 30, made two acquisitions in Q3, which added 10 locations to its footprint. Year-to-date, Herc has made eight acquisitions, investing $567 million on M&A activity, noting the “pipeline of acquisition opportunities remains strong.”

The company also reported its net fleet investment for Q3 was 34% higher compared to the same period last year due to equipment demand for mega projects, specialty, greenfields and fleet replacement. As of September 30, Herc’s total fleet value was approximately $7.1 billion at OEC, with an average fleet age of 46 months.

Looking ahead, Silber said the company expects to continue expanding its specialty fleet in order to support mega projects, cross-selling and end-market expansion. Currently, specialty equipment amounts for 23% of the company’s total fleet, second only to aerials, which amounts to 25% of fleets product offerings.

Looking at its customer and project base, contractors amount for 36% of the company’s customers, followed by industrial at 25%, infrastructure and government direct at 17%, commercial facilities at 14% and ‘other’ (sporting events, theater, TV/film and live events) was 8%.

Noting a pipeline of new construction and maintenance projects ahead that will offer a “wide spectrum of growth opportunities,” the company announced it is updating its full-year 2024 equipment rental revenue growth and gross and net rental capital expenditures guidance ranges. Equipment rental revenue growth is now expected to be 9.5 to 11% compared to its prior outlook of 7 to 10%, and net rental equipment capital expenditures after gross capex are now expected to be $650 million to $700 million after gross capex of $950 million to $1 billion from $500 million to $700 million, after gross capex of $750 million to $1 billion.