Herc Holdings Reports First Quarter 2025 Results and Affirms 2025 Full Year Guidance

First Quarter 2025 Highlights

• Record equipment rental revenue of $739 million, an increase of 3%
• Record total revenues of $861 million, an increase of 7%
• Reported net loss of $18 million or $0.63 per share driven primarily by the H&E acquisition transaction costs
• Adjusted EBITDA of $339 million was flat year-over-year with adjusted EBITDA margin of 39.4%
• Free cash flow of $49 million for the three months ended March 31, 2025

Herc Holdings Inc. (NYSE:HRI) ("Herc Holdings" or the "Company") today reported financial results for the quarter ended March 31, 2025.

"As expected, the 2025 operating landscape continues to be a tale of two disparate economic trends," said Larry Silber, president and chief executive officer. "Our national account business is growing, fueled by federal and private funding for large construction projects like data centers, manufacturing onshoring and LNG facilities. At the same time, while facility maintenance, municipal, and infrastructure projects are supporting the local markets, other more interest-rate sensitive projects continue to be on hold, restricting overall local account growth.

"Against this uneven backdrop, Herc's diversified business model helps drive resiliency," said Silber. "With growth in mega project activity and incremental revenue benefits from last year's acquisitions, we delivered financial results that were in line with our expectations for the seasonally low first quarter. And we remain on pace to outperform the overall equipment rental market again this year as Team Herc continues to identify opportunities to deliver value for our customers, while managing our fleet and capital strategically and with discipline.

"As it relates to the H&E acquisition, with the closing date targeted for mid-year, our operators and salesforce remain focused on running the day-to-day business, and our integration team is actively preparing for the migration of Herc systems and processes. We are excited to bring together two strong cultures that focus on growth and share priorities for customer service and safety."

2025 First Quarter Financial Results

• Total revenues increased 7% to $861 million compared to $804 million in the prior-year period. The year-over-year increase of $57 million related to an increase in equipment rental revenue of $20 million, reflecting uneven demand across end markets and incremental revenue from prior year greenfields and acquisitions. Sales of rental equipment increased by $36 million during the period.
• Dollar utilization decreased to 37.6% in the first quarter compared to 39.7% in the prior-year period.
• Direct operating expenses were $327 million, or 44.2% of equipment rental revenue, compared to $307 million, or 42.7% in the prior-year period. The increase as a percent of rental revenue related to lower fixed cost absorption due to the normal seasonality associated with the first quarter, particularly facilities costs due to greenfield and acquisition locations and higher insurance costs year-over-year.
• Depreciation of rental equipment increased 8% to $172 million due to higher year-over-year average fleet size. Non-rental depreciation and amortization increased 14% to $33 million primarily due to an increase in non-rental asset depreciation resulting from the growth of the business.
• Selling, general and administrative expenses were $118 million compared to $112 million in the prior-year period. As a percent of rental revenue, selling, general and administrative expenses were nearly flat year-over-year.
• Transaction expenses were $74 million compared to $3 million in the prior-year period. The increase related to costs incurred for the H&E acquisition, primarily a $64 million termination fee paid to United Rentals on behalf of H&E.
• Interest expense remained relatively flat at $62 million compared with $61 million in the prior-year period.
• Net loss was $18 million compared to net income of $65 million in the prior-year period. Adjusted net income decreased 45% to $37 million, or $1.30 per diluted share, compared to $67 million, or $2.36 per diluted share, in the prior-year period. The income tax provision in the first quarter was primarily driven by the non-deductible transaction costs related to the H&E acquisition.
• Adjusted EBITDA remained flat at $339 million and adjusted EBITDA margin was 39.4% compared to 42.2% in the prior-year period.

Rental Fleet

• Net rental equipment capital expenditures were as follows (in millions):

• As of March 31, 2025, the Company's total fleet was approximately $6.9 billion at OEC.
• Average fleet at OEC in the first quarter increased 9% compared to the prior-year period.
• Average fleet age was 47 months as of March 31, 2025 and 2024.

Disciplined Capital Management

• The Company opened 3 new greenfield locations during the three months ended March 31, 2025.
• Net debt was $4.0 billion as of March 31, 2025, with net leverage of 2.5x unchanged from the same prior-year period. Cash and cash equivalents and unused commitments under the ABL Credit Facility contributed to approximately $1.9 billion of liquidity as of March 31, 2025.
• The Company declared its quarterly dividend of $0.70, an increase of 5%, paid to shareholders of record as of February 18, 2025 on March 4, 2025.

2025 Outlook—Excluding Cinelease

The Company is affirming its full year 2025 equipment rental revenue growth, adjusted EBITDA, and gross and net rental capital expenditures guidance ranges, excluding Cinelease studio entertainment and lighting and grip equipment rental business. The sale process for the Cinelease studio entertainment business is ongoing and a transaction is expected to be completed in 2025.

As a leader in an industry where scale matters, the Company expects to continue to gain share by capturing an outsized position of the forecasted higher construction spending in 2025 by investing in its fleet, optimizing its existing fleet, capitalizing on strategic acquisitions and greenfield opportunities, and cross-selling a diversified product portfolio.

Earnings Call and Webcast Information

Herc Holdings' first quarter 2025 earnings webcast will be held today at 8:30 a.m. U.S. Eastern Time. Interested U.S. parties may call +1-800-715-9871 and international participants should call the country specific dial in numbers listed at https://registrations.events/directory/international/itfs.html, using the access code: 9128891. Please dial in at least 10 minutes before the call start time to ensure that you are connected to the call and to register your name and company.

Those who wish to listen to the live conference call and view the accompanying presentation slides should visit the Events and Presentations tab of the Investor Relations section of the Company's website at IR.HercRentals.com. The press release and presentation slides for the call will be posted to this section of the website prior to the call.

A replay of the conference call will be available via webcast on the Company website at IR.HercRentals.com, where it will be archived for 12 months after the call.

About Herc Holdings Inc.

Founded in 1965, Herc Holdings Inc., which operates through its Herc Rentals Inc. subsidiary, is a full-line rental supplier with 453 locations across North America, and 2024 total revenues were approximately $3.6 billion. We offer products and services aimed at helping customers work more efficiently, effectively, and safely. Our classic fleet includes aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment. Our ProSolutions® offering includes industry-specific, solutions-based services in tandem with power generation, climate control, remediation and restoration, pumps, and trench shorting equipment as well as our ProContractor professional grade tools. We employ approximately 7,600 employees, who equip our customers and communities to build a brighter future. Learn more at www.HercRentals.com and follow us on Instagram, Facebook and LinkedIn.

Certain Additional Information

In this release we refer to the following operating measures:

• Dollar utilization: calculated by dividing rental revenue (excluding re-rent, delivery, pick-up and other ancillary revenue) by the average OEC of the equipment fleet for the relevant time period, based on the guidelines of the American Rental Association (ARA).
• OEC: original equipment cost based on the guidelines of the ARA, which is calculated as the cost of the asset at the time it was first purchased plus additional capitalized refurbishment costs (with the basis of refurbished assets reset at the refurbishment date).

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, and the Private Securities Litigation Reform Act of 1995. Forward looking statements are generally identified by the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts," "looks," and future or conditional verbs, such as "will," "should," "could" or "may," as well as variations of such words or similar expressions. All forward-looking statements are based upon our current expectations and various assumptions and there can be no assurance that our current expectations will be achieved. You should not place undue reliance on the forward-looking statements. They are subject to future events, risks and uncertainties - many of which are beyond our control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those projected include, but are not limited to, the following: (1) the cyclical nature of our industry and our dependence on the levels of capital investment and maintenance expenditures by our customers; (2) the competitiveness of our industry, including the potential downward pricing pressures or the inability to increase prices; (3) our dependence on relationships with key suppliers; (4) our heavy reliance on communication networks, centralized information technology systems and third party technology and services and our ability to maintain, upgrade or replace our information technology systems; (5) our ability to respond adequately to changes in technology and customer demands; (6) our ability to attract and retain key management, sales and trades talent; (7) our rental fleet is subject to residual value risk upon disposition; (8) the impact of climate change and the legal and regulatory responses to such change; (9) our ability to execute our strategy to grow through strategic transactions; and (10) our significant indebtedness; and (11) our ability to complete the acquisition of H&E Equipment Services, Inc. and our ability to realize the anticipated benefits of the proposed transaction. Further information on the risks that may affect our business is included in filings we make with the Securities and Exchange Commission from time to time, including our most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and in our other SEC filings. We undertake no obligation to update or revise forward-looking statements that have been made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

Information Regarding Non-GAAP Financial Measures

In addition to results calculated according to accounting principles generally accepted in the United States ("GAAP"), the Company has provided certain information in this release that is not calculated according to GAAP ("non-GAAP"), such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per diluted common share, free cash flow and certain results excluding the Cinelease studio entertainment business. Management uses these non-GAAP measures to evaluate operating performance and period-over-period performance of our core business without regard to potential distortions, and believes that investors will likewise find these non-GAAP measures useful in evaluating the Company's performance. These measures are frequently used by security analysts, institutional investors and other interested parties in the evaluation of companies in our industry. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to similarly titled measures of other companies. For the definitions of these terms, further information about management's use of these measures as well as a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures, please see the supplemental schedules that accompany this release.

(See Accompanying Tables)

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Leslie Hunziker

Senior Vice President, Investor Relations, Communications & Sustainability

[email protected]

239-301-1675