Tue, Apr 22, 10:33 AM (31 days ago)
**Herc Holdings Inc. (HRI) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** Total revenues increased by 7% to $861 million, driven by a 3% increase in equipment rental revenue and a 52% increase in sales of rental equipment. - **Profit Margins:** Herc Holdings reported a net loss of $18 million, compared to a net income of $65 million in Q1 2024. The loss was primarily due to transaction expenses related to the acquisition of H&E Equipment Services Inc. - **Cash Flow:** Operating cash flow decreased by $69 million to $171 million, due to decreased profitability and timing of payments on accounts payable and accrued liabilities. - **Earnings Changes:** Earnings per share (EPS) turned negative, reporting a loss of $0.63 per share, compared to a gain of $2.30 per share in Q1 2024. **Key Performance Metrics:** - **Equipment Rental Revenue:** Increased by 3% to $739 million, reflecting demand across end markets and incremental revenue from prior year greenfields and acquisitions. - **Sales of Rental Equipment:** Increased by 52% to $105 million, as the company increased the volume of sales in line with fleet rotation planning. - **Direct Operating Expenses:** Increased by 7% to $327 million, primarily due to facilities expenses, self-insurance reserve increases, and re-rent expenses. - **Depreciation of Rental Equipment:** Increased by 8% to $172 million, due to an increase in average fleet size. **Trends and Uncertainties:** - **Economic Conditions:** The company faces challenges from elevated interest rates and economic uncertainty, but its diversification across industries and project types has contributed to business resiliency. - **Seasonality:** The business is seasonal, with demand for rental equipment typically lower in the winter months. The company manages costs to meet market demand and is focused on expanding its customer base to reduce the impact of seasonality. - **Acquisitions:** Herc Holdings is in the process of acquiring H&E Equipment Services Inc., which is expected to close in mid-year 2025. The acquisition is subject to customary closing conditions and has been financed through committed financing. **Future Operations Impact:** - **Liquidity and Capital Resources:** The company has approximately $4.1 billion of total nominal indebtedness outstanding and $1.9 billion in unused commitments under its ABL Credit Facility and AR Facility. The company believes it has sufficient liquidity to meet working capital requirements, anticipated capital expenditures, payment of dividends, and debt payments over the next twelve months. - **Capital Expenditures:** Net capital expenditures for rental equipment decreased by $27 million, as the company has returned to a more normalized cadence of rental equipment expenditures and disposals. - **Dividends:** The company declared a quarterly dividend of $0.70 per share, with payment date of March 4, 2025. The declaration of dividends is discretionary and will depend on business conditions, financial condition, earnings, liquidity, and capital requirements.