Herc (HRI) Q2 2025 earnings summary

Executive summary

• Completed the acquisition of H&E Equipment Services, Inc. on June 2, 2025, integrating 162 branches, expanding scale and geographic reach, and stabilizing the employee base.

• Integration efforts include remapping regions, optimizing sales territories, technology upgrades, and adding key management roles, with initial cost and revenue synergies realized.

• Opened 11 new greenfield locations and optimized the branch network for efficiency.

• Safety performance remained strong, with over 96% of branches reporting Perfect Days and a recordable incident rate of 0.92.

• Focus remains on leveraging scale, specialty fleet, and cross-selling opportunities to drive long-term growth.

Financial highlights

• Q2 2025 total revenues rose 18% year-over-year to $1,002 million; equipment rental revenue up 14% to $870 million.

• Net loss of $35 million in Q2, compared to net income of $70 million last year, mainly due to $73 million in transaction expenses and $49 million loss on Cinelease assets held for sale; adjusted net income was $56 million.

• Adjusted EBITDA increased 13% to $406 million, with margin at 40.5% (down from 42.5%); adjusted net income down 24% to $56 million.

• Excluding Cinelease, core equipment rental revenue grew 15.6% year-over-year; legacy branches saw 4% rental revenue growth, while H&E branches declined ~14–15% due to workforce disruption and local market weakness.

• Free cash flow for the first half was $103 million, down from $148 million last year; adjusted free cash flow forecasted at $400–$500 million for 2025.

Outlook and guidance

• 2025 equipment rental revenue guidance: $3.7–$3.9 billion, including six months of H&E results; adjusted EBITDA guidance of $1.8–$1.9 billion, with margin of 42–43%.

• Net rental equipment capex guidance unchanged at $400–$600 million; gross capex increased for specialty fleet to $900 million–$1.1 billion.

• Adjusted free cash flow projected at $400–$500 million, benefiting from $130 million in cash tax savings and the One Big Beautiful Bill Act.

• Targeting $700–$800 million in equipment disposals in H2 to align fleet with new revenue base.

• Management expects continued resilience due to diversification, despite economic uncertainty and elevated interest rates.