Herc Rentals sets new three-year targets
06 November 2023
Herc Rentals has set new long-term targets for its organic rental revenue growth, aiming for a compound annual growth rate (CAGR) of 10% to 14% from 2024 to 2026 as part of its new three-year performance targets.
Revealed during its investor day event, the company said the targets will see it “leverage organic strengths, invest in high-return areas of the business and capitalise on secular and structural market opportunities.”
As well as rental revenue, the company is targeting 11% to 16% annual growth rates for its organic adjusted EBITDA. At the same time, it intends to invest between $2.8 and $3.7 billion, net, on fleet for its existing branch network.
Meanwhile, Herc said it will expand its branch network through new greenfield additions and acquisitions in select markets; improve user experience by enabling mobile solutions; improve fleet-utilisation tracking and logistics management, and advance towards its 2030 sustainability goals.
Additionally, the company is introducing an operating system called E3OS, which it said will enhance culture and performance.
Larry Silber, president and chief executive officer, Herc Rentals, said, “This system is about operational effectiveness and continuous improvement through standard processes, principles, practices, and tools to ensure we deliver the optimal customer experience at every touchpoint in the customer consumption chain as we continue to grow.”
Herc also revealed the progress of targets of its three-year plan launched in 2021. Rental revenue CAGR stands at 17%, exceeding the initial 12% to 15% target.
Adjusted EBITDA growth is currently 22%, up from the target of between 17% to 20%. During the same period, capital expenditure on its fleet hit $2.1 billion as the company looked to “address an expanding market and introduce new products.”
Silber said, “We have never been better positioned to grow. We’ve never had a more resilient business model, and the market backdrop has never been stronger. Herc has what it takes, across the board, to be successful in any operating environment. And we’re only getting better.
“We’ve got great capabilities. We’ve got a great brand. We’ve got great culture and talent. Our team has never worked better together and been more aligned on what we need to do collectively to be successful. Team Herc is our differentiating factor.”