25.10.2021

Strong quarter for Herc

US rental company Herc has reported significant bounce back in terms of profitability.

Revenues for the nine months to the end of September were just under $1.5 billion, an increase of more than 18 percent on the same period last year. The vast majority of the increase came from rentals, with modest increases in new equipment sales and services. Used equipment sales from the rental fleet were substantially lower than in 2020. Pre-tax profit for the period more than quadrupled to $199 million. Rental rates improved 1.6 percent due to higher utilisation.

Capital expenditure on new equipment was $447 million, compared to $273.2 million last year, while disposals were $86.1 million compared to $114.1 million. The average age of the fleet as of the end of September was 48 months compared to 47 months this time last year.

Moving on to the third quarter, total revenues improved 20 percent to $550.4 million, with a pre-tax profit of $96.1 percent, up 86 percent on last year. The upward trend of rental rates picked up the pace during the quarter coming in 2.8 percent higher than for this quarter in 2020.

Chief executive Larry Silber said: "Our third quarter performance illustrates how Herc Rentals is shifting into high gear to capitalise on the benefits of operating leverage and scale that we discussed at our Investor Day. We achieved another record for total revenues and adjusted EBITDA in the third quarter of 2021. Dollar utilisation 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."

"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."

Vertikal Comment

After a shaky few years following its split from the Hertz car rental business in 2016, Herc Rentals finally appears to have overcome the separation, paid down what at one time looked like a crippling debt burden and come through the challenging pandemic period in good shape. It is clearly ‘gathering steam’ now which is likely to lead to its best year so far in 2021, with strong growth prospects for the year ahead as it expands its market coverage.

A very positive set of numbers.