Herc (HRI) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 equipment rental revenue of $765M, up 9% year-over-year, with total revenues reaching $848M, driven by 6.4% volume and 3.5% pricing growth, and continued expansion through acquisitions and greenfield locations.

• Adjusted EBITDA increased 2.3% to $360M (42.5% margin), while net income declined 7.9% to $70M due to higher operating and interest expenses.

• Local market growth slowed to low single digits, but was offset by acquisitions and greenfield openings, with 17–21 new locations added in the quarter.

• Mega project activity remains robust, with targeted 10–15% share across diverse end markets, supporting back-half loaded revenue and EBITDA guidance.

• Safety performance remained strong, with a Total Recordable Incident Rate of 0.72, outperforming the industry standard.

Financial highlights

• Q2 2024 equipment rental revenue: $765M (+9% YoY); total revenues: $848M (+6% YoY); adjusted EBITDA margin: 42.5% (down 140 bps YoY).

• Net income for Q2 2024: $70M ($2.46/diluted share), down from $76M; adjusted net income: $74M ($2.60/diluted share).

• Free cash flow for the first half of 2024: $148M; net leverage at 2.6x, within target range.

• Quarterly dividend of $0.665 per share declared in Q2 2024.

• Operating cash flow for the first half of 2024 was $558M, up from $516M in 2023.

Outlook and guidance

• Reaffirmed 2024 guidance: 7–10% equipment rental revenue growth, adjusted EBITDA of $1.55B–$1.6B, and net fleet CapEx of $750M–$1B.

• Results expected to be weighted toward the second half, with mega project revenue and margin performance accelerating.

• Local market growth expected to remain low single digit for 2024, with normalization anticipated as interest rates moderate.

• Disciplined fleet investments and capex guidance reaffirmed, with focus on fleet efficiency and market demand.

• Studio entertainment business (Cinelease) excluded from guidance; sale process ongoing.