Herc (HRI) Q1 2025 earnings summary

Executive summary

• Achieved record Q1 equipment rental revenue of $739 million, up 3% year-over-year, and total revenues of $861 million, up 7%, despite weather disruptions and local market headwinds.

• Net loss of $18 million ($0.63 per share) in Q1 2025, primarily due to $74 million in H&E acquisition transaction costs, including a $64 million termination fee paid to United Rentals.

• Integration of the H&E Equipment Services acquisition is the primary focus, with a targeted mid-2025 closing and a pause on other M&A; Cinelease studio entertainment business remains held for sale.

• National account business remains strong, driven by large project development and megaprojects, while local markets face challenges from elevated interest rates.

• Safety performance remains industry-leading, with over 96% of days classified as perfect and a reportable incident rate below 1.0.

Financial highlights

• Q1 2025 total revenues were $861 million, up 7% year-over-year, driven by a 3% increase in equipment rental revenue and a 52% increase in sales of rental equipment.

• Adjusted EBITDA was flat at $339 million with a margin of 39.4%; adjusted net income was $37 million ($1.30 per diluted share), down 45% year-over-year.

• Dollar utilization declined to 37.6% from 39.7% year-over-year; direct operating expenses rose to $327 million (44.2% of rental revenue).

• Free cash flow for Q1 was $49 million; net leverage remained at 2.5x.

• Depreciation of rental equipment increased 8% to $172 million; selling, general, and administrative expenses were $118 million.

Outlook and guidance

• Full-year 2025 equipment rental revenue growth expected at 4% to 6%, with adjusted EBITDA guidance of $1.575–$1.65 billion; guidance excludes Cinelease.

• Net rental equipment capital expenditures projected at $400 million to $600 million; gross capex at $700 million to $900 million.

• March and April demand rebounded, meeting expectations; incremental upside expected from acquisitions and megaprojects.

• Local markets expected to remain flat; growth driven by prior acquisitions, infrastructure, and megaprojects.

• Free cash flow expected to remain positive; ongoing focus on operating leverage and margin improvement.