Herc (HRI) investor relations material

Executive summary

• Equipment rental revenue rose 33% year-over-year to $981 million, driven by the H&E acquisition and increased mega project volume, with total revenues up 32% to $1,139 million.

• Adjusted EBITDA increased 33% to $448 million, maintaining a flat margin of 39.3% year-over-year.

• Net loss was $24 million ($0.72 per diluted share), while adjusted net income was $7 million ($0.21 per diluted share), reflecting higher depreciation, interest, and operating costs post-acquisition.

• Integration of the H&E acquisition expanded specialty locations by 25%–30% and added 2,500 employees, strengthening the sales network.

• Focus remains on leveraging scale, safety, operational execution, and digital capabilities, including record e-commerce revenue.

Financial highlights

• Equipment rental revenue: $981 million (+33% YoY); total revenues: $1,139 million (+32% YoY).

• Adjusted EBITDA: $448 million (+33% YoY); margin flat at 39.3%.

• Net loss: $24 million; adjusted net income: $7 million; adjusted EPS: $0.21.

• Free cash flow: $94 million, nearly doubled from prior year.

• Direct operating expenses: $453 million (46.2% of equipment rental revenue), up from $327 million (44.2%).

• Depreciation of rental equipment: $242 million (+41% YoY); interest expense: $128 million, up from $62 million YoY due to acquisition debt.

Outlook and guidance

• Full-year 2026 guidance affirmed: equipment rental revenue $4.275–$4.4 billion, adjusted EBITDA $2.0–$2.1 billion.

• Net rental equipment capex: $500–$800 million; gross capex: $800 million–$1.1 billion.

• Revenue synergies projected at $100–$120 million; cost synergies at $90 million incremental, targeting $125 million by year-end 2026.

• Free cash flow guidance: $400–$600 million for 2026.

• Leverage ratio expected to return to 2x–3x by year-end 2027 as EBITDA grows.