Herc Rentals has reported its first quarterly results since finalising the acquisition of H&E Equipment at the start of June, with revenues for the three months to 30 June up 18.2% to US$1 billion and EBITDA profits up 12.8% to $406 million.
These figures include one month of contributions from H&E, but pro forma revenues for the quarter were 2% down, with ‘Herc legacy’ branches reporting 4% rental revenue growth year-on-year while ‘H&E legacy’ locations reported a 14.1% decline in rental revenues.
Herc said the H&E fall was the result of its greater exposure to more challenging ‘local’, commercial markets and also disruption to its employee base during the acquisition phase.
“While integration is off to a great start, of course there is a lot of work ahead”, said Herc president and CEO, Larry Silber. “H&E’s performance was impacted by disruptions to the employee base during the acquisition bidding process and through the closing.
“Since taking over, we have stabilized that, but dis-synergies had already resulted. Those, combined with the continued moderation in the interest-rate sensitive commercial sector are factored into our new, combined outlook for 2025, which also incorporates offsetting strength in mega project activity and ongoing growth in our specialty solutions business.”
Equipment rental revenue is now expected to between $3.7 billion to $3.9 billion this year, with gross capital expenditure in the range $900 million to $1.1 billion. The guidance in February was for full year rental revenues of between $3.3 billion and $3.4 billion, with gross CapEx in the $700 million to $900 million range.
Silber said; “With the merger now behind us, our focus is on integration, optimisation and ensuring delivery of the revenue and cost synergy targets we established. It has been only about eight weeks since the close and I am pleased with the go-to-market collaboration, fleet sharing, and process alignment.
“The teams are working very well together, united in their shared commitment to our customers’ success and energised by the unique opportunity that our combined strengths represent.”
On the integration, Herc said it had stabilised the employee base and remapped the organisational structure. Equipment sharing is already underway. The integration of technology systems is being phased and likely to be completed by the third quarter of this year.
The company reported that the mix of revenues in the second quarter was 53% ‘local’ and 47% ‘national’. It is aiming for a long term mix of 60% local, 40% national.
The total fleet now has a value of $9.9 billion, at original cost, comprising 18% specialty equipment, 26% aerials, 14% earthmoving, 22% material handling, and 20% for other types of equipment.
Explainer: Why has Herc acquired H&E?