Herc breaks revenue records in second quarter

Herc reported a strong second quarter of 2024, achieving record highs for both equipment rental revenue ($765 million, a 9% increase) and total revenue ($848 million, a 6% increase). 

Herc Rentals has added 21 new locations so far in 2024.

Herc’s ability to raise rental prices by 3.5% year-over-year helped offset rising costs. The company also benefited from its aggressive acquisition strategy, adding 21 new locations so far in 2024, with 10 of those coming in the second quarter (a 48% increase in locations year-to-date). These new branches helped compensate for slower local market growth.

“While national mega projects are on plan, we saw a greater deceleration in the local market’s growth trajectory versus our forecast, primarily driven by the persistently higher interest rate environment,” said Larry Silber, president and chief executive officer of Herc Rentals, noting this did impact profit margins in the second quarter, however the company is taking steps to adjust costs in these local markets to improve profitability.

Looking ahead, Herc remains confident about the rest of 2024 and has reaffirmed its annual guidance for equipment rental revenue growth (7% to 10%), adjusted EBITDA (an increase of 6% to 9% compared to 2023), and capital expenditures (net rental equipment capital expenditures after gross capex: $500 million to $700 million, after gross capex of $750 million to $1 billion).

“Based on current line-of-sight to market trends, we expect to deliver record full-year results and are reaffirming our annual performance targets,” Silber said. “Despite temporarily slower growth in the more rate-sensitive local market this year, the outlook for rental demand long-term is robust as the pipeline for mega projects remains strong, data center construction is accelerating, federal infrastructure spending continues to roll out, and rental penetration increases.”

Overall, Herc’s results paint a positive picture for the equipment rental industry. While local markets might see some moderation, Herc’s strategic acquisitions and focus on fleet optimization position them well to capitalize on continued growth, especially in national mega projects.