NEW YORK – Herc Holdings Inc. (NYSE:) reported record third quarter revenue but missed earnings estimates as higher costs offset strong rental demand. HRI shares were trading flat following the announcement.
The equipment rental company posted adjusted earnings per share of $4.35, falling short of analyst expectations of $4.55. However, total revenue rose 6% year-over-year to $965 million, surpassing the consensus estimate of $934.81 million.
Equipment rental revenue, Herc’s largest segment, jumped 13% to $866 million compared to the prior year period. The company said rental pricing increased 2.3% YoY while volume grew 10.7%.
“In the third quarter, we significantly outpaced overall industry growth on both a total rental revenue basis and from an organic revenue perspective,” said Larry Silber, president and CEO of Herc Holdings. “By capitalizing on our broad end-market coverage, diversified product and services offering and expanding share in resilient urban markets, we continue to deliver strong volume and a solid price/mix performance.”
Despite the revenue gains, higher costs weighed on profitability. Direct operating expenses rose to 38.6% of equipment rental revenue, up from 37.6% a year ago, due to growth-related personnel and facilities costs. Interest expense also increased to $69 million from $60 million last year on higher borrowings.
For the full year 2024, Herc narrowed its equipment rental revenue growth guidance to 9.5-11%, up from its prior 7-10% range. The company maintained its adjusted EBITDA forecast of $1.55 billion to $1.60 billion.
With strong rental demand offsetting cost pressures, Herc appears positioned for continued growth as it expands its footprint through acquisitions and new branch openings. The company’s ability to manage expenses will be key to improving profitability going forward.
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