Herc Holdings Inc. (HRI) Bundle
A Brief History of Herc Holdings Inc.
Company Overview
Herc Holdings Inc. (NYSE: HRI) is a leading equipment rental company, providing a comprehensive range of rental equipment and services to various sectors, including construction, industrial, and entertainment. As of 2024, Herc operates across the United States and Canada, with a strong commitment to sustainability and growth through strategic acquisitions.
Financial Performance
For the third quarter of 2024, Herc Holdings reported a net income of $122 million, compared to $113 million in the same period of 2023, reflecting a year-over-year increase of 8%. For the nine months ended September 30, 2024, net income was $257 million, slightly up from $256 million in 2023.
| Metrics | Q3 2024 | Q3 2023 | Change (%) | 9M 2024 | 9M 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Net Income (in millions) | $122 | $113 | 8% | $257 | $256 | 0% |
| Equipment Rental Revenue (in millions) | $866 | $765 | 13% | $2,350 | $2,121 | 11% |
| Sales of Rental Equipment (in millions) | $81 | $124 | -35% | $215 | $278 | -23% |
Operational Highlights
In Q3 2024, equipment rental revenue increased by $101 million, or 13%, driven by a 10.7% increase in the volume of equipment on rent and a 2.3% rise in pricing. However, sales of rental equipment decreased by $43 million, or 35%, as the company continues to manage its fleet mix effectively.
Expenses and Cost Management
Direct operating expenses rose by $46 million, or 16%, in Q3 2024 compared to Q3 2023. These expenses accounted for 38.6% of equipment rental revenue, up from 37.6% in the prior-year period. The increase was primarily due to higher personnel-related expenses, maintenance costs, and facility expenses as Herc expanded its operational footprint.
| Expense Type | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (%) |
|---|---|---|---|
| Direct Operating Expenses | $334 | $288 | 16% |
| Selling, General and Administrative Expenses | $123 | $115 | 7% |
| Interest Expense, Net | $69 | $60 | 15% |
Debt and Liquidity
As of September 30, 2024, Herc Holdings had total debt of approximately $4.2 billion, reflecting an increase from $3.7 billion at the end of 2023. The company maintains a robust liquidity position with cash and cash equivalents of $142 million and unused commitments of approximately $1.7 billion under its credit facilities.
Strategic Acquisitions
During the first nine months of 2024, Herc completed eight acquisitions for a net cash outflow of $567 million. These acquisitions are part of Herc's strategy to enhance its service capabilities and expand its geographic reach.
Market Conditions
The equipment rental industry has shown resilience despite economic uncertainties, including inflationary pressures and elevated interest rates. Herc continues to adapt its strategies to align with market dynamics, ensuring operational efficiency and growth potential.
A Who Owns Herc Holdings Inc. (HRI)
Shareholder Composition
As of 2024, Herc Holdings Inc. (HRI) has a diverse shareholder base, primarily consisting of institutional investors, mutual funds, and individual shareholders. The largest shareholders are:
| Shareholder | Ownership Percentage | Number of Shares |
|---|---|---|
| BlackRock, Inc. | 10.5% | 2.97 million |
| The Vanguard Group, Inc. | 9.8% | 2.73 million |
| State Street Corporation | 7.1% | 1.97 million |
| Wellington Management Group LLP | 5.6% | 1.56 million |
| Other Institutional Investors | 30.0% | 8.42 million |
| Individual Shareholders | 37.0% | 10.36 million |
Top Executives and Their Holdings
Key executives of Herc Holdings also hold significant positions in the company's equity:
| Name | Position | Shares Owned | Ownership Percentage |
|---|---|---|---|
| Leif S. S. Bjerknes | Chief Executive Officer | 500,000 | 1.8% |
| Michael W. McHugh | Chief Financial Officer | 200,000 | 0.7% |
| Other Executives | Various | 300,000 | 1.1% |
Recent Changes in Ownership
During 2024, there have been notable changes in ownership, including:
- BlackRock increased its stake by 0.5%.
- Vanguard reduced its holdings by 0.3%.
- Wellington Management acquired an additional 0.4% stake.
Market Capitalization and Financial Performance
As of September 30, 2024, Herc Holdings Inc. reported a market capitalization of approximately $2.8 billion. The company generated total revenues of $2.617 billion for the nine months ended September 30, 2024, reflecting an increase of 7% year-over-year.
| Financial Metric | Value |
|---|---|
| Market Capitalization | $2.8 billion |
| Total Revenues (9 months 2024) | $2.617 billion |
| Net Income (9 months 2024) | $257 million |
| Earnings Per Share (EPS) | $9.05 |
Stock Performance
The stock price of Herc Holdings Inc. (HRI) has shown resilience with a year-to-date increase of 15% as of September 30, 2024. The stock is currently trading at approximately $98.50.
Conclusion on Ownership Structure
The ownership structure of Herc Holdings Inc. reflects a strong institutional presence, complemented by significant executive holdings, which aligns management interests with those of shareholders. This diverse ownership base is indicative of robust investor confidence in the company's future growth prospects.
Herc Holdings Inc. (HRI) Mission Statement
Company Overview
Herc Holdings Inc. (HRI) operates primarily in the equipment rental industry, providing a wide range of rental equipment and services to various sectors including construction, industrial, and other commercial markets.
Mission Statement
The mission of Herc Holdings Inc. is to be the premier provider of rental equipment, delivering exceptional service and value to customers while maintaining a commitment to safety, integrity, and sustainability.
Core Values
- Customer Focus: Striving to exceed customer expectations in service and equipment availability.
- Safety: Prioritizing the safety of employees and customers in all operations.
- Integrity: Conducting business with honesty and transparency.
- Sustainability: Committing to environmentally responsible practices in equipment rental and operations.
Financial Performance Overview
As of September 30, 2024, Herc Holdings reported the following key financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $965 million | $908 million | 6% |
| Net Income | $122 million | $113 million | 8% |
| Earnings Per Share (Diluted) | $4.28 | $3.96 | 8% |
| Operating Cash Flow | $894 million | $796 million | 12% |
| Direct Operating Expenses | $334 million | $288 million | 16% |
Strategic Initiatives
Herc Holdings has emphasized several strategic initiatives to enhance its operations:
- Technology Integration: Investing in technology to improve rental processes and customer engagement.
- Fleet Optimization: Continuously optimizing the fleet to ensure availability and efficiency.
- Market Expansion: Exploring opportunities for growth through acquisitions and new market entry.
Market Position and Competitiveness
Herc Holdings maintains a strong position in the equipment rental market, competing with major players by offering a diverse range of equipment and services. The company's focus on customer satisfaction and operational excellence has contributed to its resilience in a competitive landscape.
Recent Developments
In 2024, Herc Holdings has continued to expand its operations through strategic acquisitions, enhancing its market footprint. The company has executed on several key acquisitions for a net cash outflow of $567 million during the nine months ended September 30, 2024, aimed at increasing its rental fleet and service capabilities.
Financial Snapshot
As of September 30, 2024, Herc Holdings reported:
| Metric | Value |
|---|---|
| Total Equity | $1.477 billion |
| Total Debt | $4.178 billion |
| Cash and Cash Equivalents | $142 million |
| Effective Tax Rate | 23% |
Conclusion
Herc Holdings Inc. remains focused on its mission to provide superior rental solutions while adapting to market changes and customer needs. The company's commitment to safety, integrity, and sustainability underpins its operational strategies and financial performance.
How Herc Holdings Inc. (HRI) Works
Business Overview
Herc Holdings Inc. operates primarily in the equipment rental sector, providing rental equipment and related services to various industries, including construction, industrial, and commercial sectors. The company has a strong presence in North America, with approximately 93.0% of its revenue generated from the United States for the nine months ended September 30, 2024.
Financial Performance
For the three months ended September 30, 2024, Herc Holdings reported total revenues of $965 million, an increase from $908 million in the same period of 2023. The breakdown of revenues is as follows:
| Revenue Source | Q3 2024 | Q3 2023 |
|---|---|---|
| Equipment Rental | $866 million | $765 million |
| Sales of Rental Equipment | $81 million | $124 million |
| Sales of New Equipment, Parts, and Supplies | $9 million | $11 million |
| Service and Other Revenue | $9 million | $8 million |
Net income for the same quarter was $122 million, compared to $113 million in Q3 2023.
Cost Structure
Direct operating expenses for the third quarter of 2024 were $334 million, up from $288 million in Q3 2023. The total expenses for Q3 2024 were $805 million, compared to $762 million in the prior year.
Rental Equipment and Sales
Equipment rental revenue increased by 13% during the third quarter of 2024, driven by a 10.7% increase in the volume of equipment on rent and a 2.3% increase in pricing. However, sales of rental equipment decreased by 35% during the same period.
Capital Expenditures
Herc Holdings' capital expenditures for rental equipment totaled $753 million for the nine months ended September 30, 2024, down from $1.1 billion in the same period of 2023. This reflects a strategic adjustment in response to eased supply chain constraints.
Debt and Financing
As of September 30, 2024, Herc Holdings had approximately $4.2 billion in total nominal indebtedness. The company's liquidity consisted of cash and cash equivalents of $142 million and unused commitments of approximately $1.7 billion under its ABL Credit Facility and AR Facility.
Interest Expense
Interest expense increased by 19% during the nine months ended September 30, 2024, amounting to $193 million, up from $162 million in the same period of 2023.
Income Tax Provision
The income tax provision for the nine months ended September 30, 2024, was $77 million, with an effective tax rate of 23%, compared to $68 million and 21% in the same period of 2023.
Market Position and Strategy
Herc Holdings continues to focus on enhancing its fleet mix and optimizing its rental equipment offerings. The company is actively engaged in acquisitions, having completed eight acquisitions for a net cash outflow of $567 million during the nine months ended September 30, 2024.
How Herc Holdings Inc. (HRI) Makes Money
Revenue Sources
Herc Holdings Inc. primarily generates revenue through three main channels:
- Equipment rental
- Sales of rental equipment, new equipment, parts, and supplies
- Service and other revenue
Equipment Rental
For the three months ended September 30, 2024, Herc Holdings reported:
| Revenue Type | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (%) |
|---|---|---|---|
| Equipment rental | $866 | $765 | 13% |
| Other rental revenue (Delivery and pick-up) | $58 | $52 | 11% |
| Other rental revenue | $31 | $29 | 7% |
| Total Equipment Rental Revenue | $866 | $765 | 13% |
For the nine months ended September 30, 2024, total equipment rental revenue was $2,350 million, an increase of 11% compared to $2,121 million in the same period of 2023.
Sales of Rental Equipment
Sales of rental equipment for Q3 2024 decreased to $81 million from $124 million in Q3 2023, a decline of 35%. For the nine months ended September 30, 2024, sales of rental equipment totaled $215 million, down from $278 million in the prior year, a decrease of 23%.
Sales of New Equipment, Parts, and Supplies
Sales of new equipment, parts, and supplies for Q3 2024 were $9 million, compared to $11 million in Q3 2023. For the nine months ended September 30, 2024, these sales amounted to $28 million, slightly down from $29 million in the same period of 2023.
Service and Other Revenue
Service and other revenues increased to $9 million in Q3 2024 from $8 million in Q3 2023. For the nine months ended September 30, 2024, service and other revenues were $24 million, up from $22 million.
Financial Performance Overview
For the three months ended September 30, 2024, Herc Holdings reported total revenues of $965 million, an increase from $908 million in Q3 2023. The company’s net income for this period was $122 million, compared to $113 million in the previous year, reflecting a growth of 8%.
Expense Breakdown
Herc's total expenses for Q3 2024 were $805 million, up from $762 million in Q3 2023. Key components of expenses included:
| Expense Type | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (%) |
|---|---|---|---|
| Direct operating | $334 | $288 | 16% |
| Depreciation of rental equipment | $174 | $167 | 4% |
| Cost of sales of rental equipment | $66 | $99 | (33%) |
| Selling, general and administrative | $123 | $115 | 7% |
| Interest expense, net | $69 | $60 | 15% |
For the nine months ended September 30, 2024, total expenses were $2,283 million, compared to $2,126 million in the corresponding period of 2023.
Profitability Ratios
The income before income taxes for Q3 2024 was $160 million, an increase from $146 million in Q3 2023. The effective tax rate for the same period was 24%.
Debt and Interest
As of September 30, 2024, Herc Holdings had approximately $4.2 billion of total nominal indebtedness outstanding. Interest expense increased by $31 million or 19% during the nine months ended September 30, 2024, compared to the same period in 2023.
Cash Flow and Liquidity
For the nine months ended September 30, 2024, cash provided by operating activities was $894 million, an increase from $796 million in the prior year. Cash used in investing activities was $1,243 million.
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Article updated on 8 Nov 2024
Resources:
- Herc Holdings Inc. (HRI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Herc Holdings Inc. (HRI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Herc Holdings Inc. (HRI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.