Hertz Equipment Rental Corp. plans to spend about $150 million on North American rental capex in 2010, the company said during its second-quarter earnings call last week. Worldwide, HERC fleet capex is estimated in the $180 to $200 million range for the year, HERC president Gerry Plescia told RER.
The company expects North American capex to be around $200 million in 2011, assuming a growth rate of 12 to 15 percent, Hertz chairman and CEO Mark Frissora added.
Frissora told the conference that HERC’s rental volume, which improved sequentially in the second quarter, finally turned positive year over year at the end of June.
“Utilization improved 430 basis points on a sequential quarterly basis, and corporate EBITDA margin expanded to 35.5 percent from 33.8 percent in the first quarter,” Frissora added. “Everything continues to move in the right direction, including the industrial market recovery, new infrastructure projects and national accounts expansion. BP, one of our largest national accounts, has continued to place orders for equipment to support the initial cleanup efforts of the oil spill in the Gulf. Our current monthly run rate for those orders is roughly $600,000.”
Hertz reported revenues of $265.8 million and corporate EBITDA of $94.3 million for HERC in the second quarter.
“We saw a demand for industrial and earthmoving equipment beginning to pick up in the second quarter,” said chief financial officer Elyse Douglas. “Revenue from our industrial business was up 17.8 percent in the recent quarter. Our strategy to shift more of our equipment mix to this category is benefiting us, as facility maintenance, petrochemical refining, energy services and oil and gas exploration continued to add new projects and restart deferred projects. In the second quarter, industrial equipment represented 29.1 percent of our total North American revenue, up from 23 percent a year ago.”
Plescia said there is still an excess of supply of aerial equipment in the marketplace. “There is still excess supply as that starts to mitigate and balance, that’s where we’ll start to get some better pricing metrics on that part of the industry,” Plescia said. “I think that will happen as we get into the second quarter and beyond next year.”
Based in Park Ridge, N.J., HERC is No. 4 on the RER 100.