Hertz Equipment Rental Corp. posted worldwide revenue of $413 million in the fourth quarter of 2014, a 3-percent increase compared to the previous year. The increase was 5 percent excluding currency effects. Rental and rental-related revenue increased 5 percent in the 2014 fourth quarter compared to Q413, or 7 percent excluding currency effects. Worldwide volume increased 7 percent in Q414.
Equipment rental pricing increased 1 percent year over year in the fourth quarter. Time utilization was 67 percent, up 100 basis points year over year and dollar utilization also increased 1 percent to 38 percent.
In North America, fourth quarter total equipment rental revenue was $387 million, a 4-percent year-over-year hike, or 6 percent excluding currency effects. The United States represented 80 percent of that revenue, with 20 percent coming from Canada. North America rental and rental-related revenue increased 6 percent, while rental volume jumped 7 percent. Equipment rental pricing increased by 2 percent year over year.
“In the second half of 2014, we established business priorities that focused on rightsizing the fleet and increasing the top line by improving sales capacity,” said Brian MacDonald, president and CEO of HERC. “By year end, U.S. revenue growth had rebounded, trending slightly above industry levels, and outpaced fleet growth. Unfortunately at the same time, weakening demand in Canada persisted.”
Oil and gas represented roughly 25 percent of HERC’s total North America equipment rental revenue, with 15 percent of that generated from upstream exploration and production activities, where major oil producers are beginning to reduce spending.
“While we see risk to oil and gas this year, we are managing through the volatility and are moderating our revenue growth forecasts accordingly,” added MacDonald. “We are aggressively working to offset weakness by improving productivity, redeploying equipment and pursuing growth in the non-residential construction and manufacturing sectors where low fuel prices are generating opportunities. Other industrial verticals such as power and chemical processing are also areas for growth.”
HERC is continuing to build the scale and competency of its sales force with a focus on winning new accounts and diversifying its customer base, the company said. Economists are projecting 3 percent GDP growth in North America in 2015 while rental equipment experts are estimating 8-percent industry growth.
For the full year, HERC posted worldwide rental revenue of $1.574 billion, a 2 percent year-over-year increase compared to $1.538 billion in 2013.
Hertz Corp. said it remains committed to the separation of its equipment rental business and is continuing to advance those plans, although the timing of the actual separation will not occur until after the company has completed its accounting review, filed its financial statements with the SEC and completed the audited financial statements for the equipment rental business.
The company reiterated that previously issued financial statements must be restated and can no longer be relied on as a result of accounting errors. The impact on pre-tax income from the errors totaled more than $150 million for 2011 through 2013. The company said the review and investigation of its financial records are ongoing and numbers are subject to change.
Hertz car rental revenue was flat in the quarter at about $1.47 billion.
Based in Naples, Fla., Hertz Equipment Rental Corp. is No. 3 on the RER 100.
