Herc Holdings Reports 2024 Results and 2025 Outlook
Herc Holdings Inc. (NYSE: HRI), a leading provider of equipment rental services, announced its financial results for the fourth quarter and full year ended December 31, 2024. Despite a more challenging market than anticipated, the company delivered record results, outperforming industry revenue growth.
“In 2024, despite a more challenging market than anticipated, we delivered another year of record results, significantly outperforming industry revenue growth by leveraging the strength of tenured customer relationships, the value derived from strategic capital-allocation priorities and our diversified position across products, geographies, and end markets,” said Larry Silber, president and chief executive officer.
“While the higher-for-longer interest rate environment continues to pressure local market growth, we captured an outsized share of national account mega projects last year. We also completed nine acquisitions, supporting market consolidation and positioning our company for long-term growth opportunities and greater efficiencies of scale. Strategic pricing, agile fleet management, and enterprise-wide cost controls helped sustain margins in this dynamic environment.”
Silber also noted that while the 2025 operating landscape is still uncertain, Herc Holdings’ diversified business model, asset optimization, and prudent investments would allow the company to navigate local market pressures and capitalize on opportunities from new mega projects. Looking ahead, the company expects new government policies and spending initiatives to provide growth opportunities.
Fourth Quarter 2024 Financial Results
Total revenues increased by 14%, reaching $951 million, up from $831 million in the prior-year period. The year-over-year increase of $120 million was primarily driven by a $91 million increase in equipment rental revenue, reflecting a 2.1% positive pricing and 11.6% increased volume. Sales of rental equipment increased by $28 million.
Dollar utilization decreased slightly to 40.6% compared to 40.9% in the fourth quarter of 2023. Direct operating expenses rose to $324 million, or 38.6% of equipment rental revenue, up from $287 million, or 38.4% in the previous year. This increase was largely due to business growth, including personnel and facilities costs associated with greenfields and acquisitions.
Depreciation of rental equipment increased by 10% to $180 million due to a higher average fleet size, and non-rental depreciation and amortization increased 21% to $35 million due to the amortization of acquisition intangible assets.
Selling, general, and administrative expenses were $122 million, or 14.5% of equipment rental revenue, compared to $116 million, or 15.5%, in the prior-year period. This decrease as a percentage of revenue was driven by improved operating leverage.
Interest expense rose to $67 million from $62 million due to higher average debt balances, mainly used to fund acquisitions and invest in rental equipment, though it was slightly offset by lower interest rates on floating-rate debt.
The company reported a net loss of $46 million for the fourth quarter of 2024, compared to net income of $91 million in the prior-year period. The net loss was attributed to a $194 million loss on assets held for sale, primarily related to adjustments of Cinelease’s net assets. Adjusted net income for the quarter increased by 11% to $102 million, or $3.58 per diluted share, compared to $92 million, or $3.24 per diluted share in the previous year.
Adjusted EBITDA rose 15% to $438 million, compared to $382 million in the same period last year, with an adjusted EBITDA margin of 46.1%, slightly up from 46.0%.
Full Year 2024 Financial Results
For the full year 2024, Herc Holdings reported total revenues of $3,568 million, a 9% increase compared to $3,282 million in 2023. This growth was driven by an 11% increase in equipment rental revenue, reflecting a 3.2% positive pricing and a 9.3% volume increase. However, unfavorable mix and inflation partially offset this growth. Sales of rental equipment decreased by $35 million year over year.
Dollar utilization increased slightly to 40.9% from 40.8% in the prior year. Direct operating expenses rose to $1,291 million, or 40.5% of equipment rental revenue, compared to $1,139 million, or 39.7% in 2023, reflecting business growth and associated personnel, facilities, and maintenance costs. Additionally, insurance expenses increased due to higher self-insurance reserves, primarily linked to unsettled claims.
Depreciation of rental equipment grew by 6% to $679 million, reflecting a higher average fleet size, while non-rental depreciation and amortization increased by 13% to $127 million due to amortization of acquisition intangible assets.
Selling, general, and administrative expenses were $480 million, or 15.1% of equipment rental revenue, compared to $448 million, or 15.6% in the prior-year period. This decrease was driven by improved operating leverage.
Interest expense increased to $260 million, compared to $224 million in 2023, due to higher debt balances resulting from acquisitions and rental equipment investments.
Herc Holdings reported a net income of $211 million for 2024, down from $347 million in the previous year, with the decline largely driven by the $194 million loss on assets held for sale. Adjusted net income increased to $367 million, or $12.88 per diluted share, up 5% from $353 million, or $12.30 per diluted share, in 2023. The effective tax rate increased to 27% from 22% due to non-deductible goodwill impairment and other non-deductible expenses.
Adjusted EBITDA for the year increased by 9% to $1,583 million, compared to $1,452 million in 2023, with an adjusted EBITDA margin of 44.4%, slightly up from 44.2%.
As the company enters 2025, Herc Holdings remains well-positioned to navigate ongoing challenges while pursuing growth opportunities, with a strategic focus on acquisitions, fleet optimization, and national account mega projects.
Rental Fleet Update
Net Rental Equipment Capital Expenditures (in millions):
| Year Ended December 31, | 2024 | 2023 |
|---|---|---|
| Rental Equipment Expenditures | $1,048 | $1,320 |
| Proceeds from Disposal of Rental Equipment | $(288) | $(325) |
| Net Rental Equipment Capital Expenditures | $760 | $995 |
As of December 31, 2024, the Company’s total fleet value was approximately $7.0 billion at OEC (Original Equipment Cost). The average fleet at OEC for the fourth quarter grew by 13% compared to the previous year, with a 11% increase for the full year. The average fleet age was 46 months, slightly higher than 45 months at the same time in 2023.
Disciplined Capital Management
In 2024, Herc Holdings completed nine acquisitions, adding 28 locations, and opened 23 new greenfield locations. As of December 31, 2024, the Company’s net debt stood at $4.0 billion, maintaining a net leverage ratio of 2.5x, unchanged from the end of 2023. The company had approximately $1.9 billion in liquidity, derived from cash, cash equivalents, and unused commitments under the ABL Credit Facility.
Herc Holdings also declared a quarterly dividend of $0.665 per share, payable on December 27, 2024, to shareholders of record as of December 16, 2024.
2025 Outlook – Excluding Cinelease
For the full year 2025, Herc Holdings has provided the following guidance, excluding the Cinelease studio entertainment and lighting equipment rental business (the sale process for which is expected to be completed in 2025):
- Equipment Rental Revenue Growth: 4% to 6%
- Adjusted EBITDA: $1.575 billion to $1.650 billion
- Net Rental Equipment Capital Expenditures: $400 million to $600 million
- Gross Capital Expenditures: $700 million to $900 million
Herc Holdings aims to capture a larger share of the expected increase in construction spending in 2025 by continuing to invest in its fleet, optimize existing assets, pursue strategic acquisitions, and capitalize on new greenfield opportunities. The company will also focus on cross-selling its diverse product offerings.
Earnings Call and Webcast Information
Herc Holdings will host its fourth-quarter 2024 earnings webcast today at 8:30 a.m. U.S. Eastern Time. Interested participants in the U.S. can call +1-800-715-9871, while international callers can find their specific dial-in numbers . Please dial in at least 10 minutes before the start of the call to ensure a smooth connection and register your name and company.
About Herc Holdings Inc.
Founded in 1965, Herc Holdings Inc., through its subsidiary Herc Rentals Inc., is a full-line rental supplier with 451 locations across North America. In 2024, the company’s total revenues were approximately $3.6 billion. Herc Rentals provides products and services designed to help customers operate more efficiently, effectively, and safely. The fleet includes aerial, earthmoving, material handling, trucks, trailers, air compressors, compaction, and lighting equipment. Additionally, ProSolutions® offers industry-specific solutions along with power generation, climate control, remediation, restoration, pumps, trench shoring equipment, and professional-grade tools under the ProContractor brand. With approximately 7,600 employees, Herc Rentals is dedicated to supporting its customers and communities to build a brighter future.
Additional Information
In this release, we refer to the following operating measures:
- Dollar Utilization: This is calculated by dividing rental revenue (excluding re-rentals, delivery, pick-up, and other ancillary revenue) by the average OEC of the equipment fleet for the relevant time period, based on the guidelines from the American Rental Association (ARA).
- OEC (Original Equipment Cost): This is calculated as the cost of the asset at the time of purchase, including any additional capitalized refurbishment costs. Refurbished assets have their OEC reset to the refurbishment date.
