Herc smashes revenue records
By Lindsey Anderson22 July 2022
Herc Rentals has reported equipment rental revenues of $605.4 million for its second quarter period, which ended June 30. That is 35.1 percent higher than the $448.0 million reported in 2021, and compares to $393.5 million in 2018.
The company said it was benefitting from tight equipment inventories, which is helping create a shift from ownership to rental by its customers, and a steady stream of major projects in infrastructure and the commercial and energy sectors.
Total revenues in the quarter were $640.4 million - a 30 percent increase - which was also a company record. Net profits rose 53.3% to $72.2 million, with EBITDA profit rising 36.8% to $284.2 million.
Herc updated its outlook for the rest of the year, increasing its lower limit of adjusted EBITDA from $1.175 billion to $1.195 billion, which reflects a 34 percent to 39 percent increase over its 2021 results. The company is maintaining its net fleet CapEx guidance of $900 million to $1.12 billion.
During the first half of 2022, Herc acquired nine companies with a total of 12 locations and opened 10 new greenfield locations. Year to date, the company has spent $317 million in net cash expenditures on acquisitions.
Regarding supply chain and equipment delivery delays, the company said it has been visiting some of its largest suppliers and OEMs and that it is confident it will get the fleet that’s been ordered in 2022 and 2023. Herc said by ordering early, new fleet is arriving steadily and that it expects new equipment to drive revenue growth.
“We see continued growth opportunities through 2023 and 2024 as the pent-up demand in all of our end markets coupled with the opportunities to support the many infrastructure projects being announced as part of the $550 billion infrastructure funding provides an outstanding roadmap for future growth,” said President and CEO Larry Silber during an investors call.
“Many of the industrial projects being announced are in the geographies where we have focused our acquisitions and Greenfield additions such as Texas, Arizona, Toronto, Detroit, and Chicago. The Southeast also has strong prospects.
“New manufacturing facilities for semiconductors, electric vehicles, and batteries, LNG plants, renewables and the power grid are being announced consistently and we have the scale and operations to support the many projects being announced throughout all of our regions.”
Herc said the North American rental market size is now valued at $60 billion and will grow by about 15 percent in 2022.
“Every day, new mega infrastructure and other industrial and commercial projects are announced throughout North America,” Silber said. “We intend to get our fair share of this new activity.
“We expect to continue our momentum by addressing the opportunities in the market and outperforming the overall industry as we grow through organic growth supplemented by select acquisitions.”
Silber added; “Demand for our equipment rental services continues to be strong as we enter our seasonally strongest quarters.
“We continue to benefit from tight equipment inventory and believe we are seeing a secular shift from ownership to rental by our customers. With the initiation of new infrastructure projects being announced daily, we believe we are well positioned to generate continued growth in 2023.”
Larry Silber is the 2022 ALH Conference keynote speaker. To register to attend the Sept. 29 conference in Chicago, click here.