Herc Rentals’ 4Q earnings per share fall short of analysts’ expectations, but revenue surpasses estimates due to national mega projects

Herc Rentals Inc., headquartered in Bonita Springs, experienced robust revenue growth driven by national account mega projects and strategic acquisitions in urban markets. Despite falling short of analysts’ estimates for adjusted net income for the third consecutive quarter, Herc Rentals exceeded revenue estimates by reporting a record turnover of $951 million in the fourth quarter.

The company reported an adjusted net income increase of 11% to $102 million, or $3.58 per diluted share, compared to $92 million, or $3.24 per diluted share, from the previous year. This success was overshadowed by missing estimates for the third quarter in a row. Notably, the company also failed to meet analysts’ expectations in the previous year’s fourth quarter as well as in the second and third quarters of 2024.

Excluding the Cinelease studio entertainment and lighting and grip equipment rental business, which has been on the market for sale since 2023, Herc Rentals reported a loss of $1.62 per share compared to earnings per share of $3.20 in the fourth quarter of 2023. Herc Rentals expressed optimism about the ongoing sale process for the Cinelease studio entertainment business, expecting the transaction to be completed in 2025.

Herc Rentals continued to expand by completing nine acquisitions, which included 28 new locations, and opening 23 subsidiary locations in urban markets in 2024. The company highlighted that adding new locations is crucial for increasing market share in urban areas. Herc Rentals emphasized that acquisitions must align with their strategic, financial, and cultural filters to ensure cohesive growth.

As the third-largest equipment rental company in North America, Herc Rentals operates through its Herc Rentals Inc. unit with a substantial fleet totaling $7 billion at original equipment cost as of December 31, 2024. Despite net debt amounting to $4 billion and net leverage of 2.5x remaining unchanged from the previous year, Herc Rentals maintained approximately $1.9 billion in liquidity through cash, cash equivalents, and unused commitments under a credit facility as of December 31, 2024.

Key highlights of the fourth quarter included equipment rental revenue of $839 million, a 12% increase, total revenues of $951 million, a 14% increase, a 2.1% year-over-year growth in rental pricing, and an adjusted EBITDA of $438 million, reflecting a 15% increase.

Furthermore, Herc Rentals revealed plans for 2025, projecting equipment rental revenue growth between 4% and 6%, adjusted EBITDA ranging from $1.575 billion to $1.650 billion, and net rental equipment capital expenditures of $400 million to $600 million. Despite uncertainties in the operating landscape for 2025, Herc Rentals remains committed to capitalizing on new opportunities and navigating market pressures while leveraging their diversified business model and strategic investments.