Herc could double fleet spending in 2022
By Murray Pollok21 September 2021
Herc Rentals could double its net spending on fleet next year to as much as $1.1 billion under its new growth and capital allocation plan.
During its investor day meeting this week, Herc said it would accelerate its rate of growth in both revenue and EBITDA profits and upgrade its fleet expenditure plan, with spending on equipment to increase from between US$500 and $550 million this year to a range from $820 million to $1.12 billion in 2022.
The plan will see investment in organic growth, additional rental locations in urban areas, as well as acquisitions.
It also plans to expand its specialty rentals business, with a target for such equipment to reach 30% of original equipment cost (OEC) by 2024.
Herc has set itself a three-year target of 12% to 15% compound annual growth in organic rental revenue from the midpoints of fiscal years 2021 to 2024. It has also established an organic EBITDA growth target of 17% to 20% on the same basis.
“We are pleased with the progress we have made over the last five years as an independently traded public company and are now shifting into high gear to accelerate our growth and return to shareholders,” said Larry Silber, President and CEO.
“We have strong momentum and intend to invest in new locations and add to our fleet to enhance our urban density, while improving operating leverage and scale. We intend to increase market share through both organic growth and mergers and acquisitions.”
Silber said the company’s capital spending would balance between organic and acquisition growth; “We also intend to enhance our returns to shareholders through the establishment of a quarterly dividend. We are well-positioned to execute our strategy and deliver value to all of our stakeholders”.