Revenue and Profit Drops for Herc Rentals in First Independent Reporting Period
Reporting results for the first time as an independent public company, Herc Rentals posted total revenues in the second quarter of 2016 of $380.4 million compared with $422.7 million in the second quarter of 2015, a 10-percent decrease. The decline was 5.9 percent year over year excluding operations in France and Spain that were sold in October 2015 as well as foreign currency translations.
Equipment rental revenue in the second quarter was $327.9 million compared to $347.7 million in last year’s second quarter, a 5.7-percent drop. Excluding the divested operations in France and Spain and currency translation, equipment rental revenue was flat compared to Q215. And equipment rental revenue in key markets increased 8.1 percent, the company said, offsetting a 27.3-percent slide in upstream oil and gas markets in the second quarter compared to the prior year.
Herc Holdings reported a net loss in the second quarter of 2016 of $8 million ($0.28 per diluted share) compared to net income of $10.6 million ($0.35 per diluted share) during the same period in 2016. The quarter was negatively affected by lower sales of revenue sales of revenue-earning equipment and planned changes in low margin new equipment sales programs, including the elimination of certain equipment dealerships.
“We continued to execute our long-term strategy to diversify our fleet and broaden our customer mix while successfully accomplishing our separation from the Hertz car rental business on June 30, 2016,” said Larry Silber, president and CEO. “In our key markets, which represented 84 percent of our business in the second quarter, rental revenue improved 8.1 percent over the prior year.
“In addition, we are making good progress on our growth initiatives. Our ProSolutions services, which focus on providing customized solutions using specialty equipment such as climate control, pump and power generation gear, are gaining momentum with customers. Also, we increased pricing on a worldwide basis, achieving a 0.5-percent increase in the quarter year over year.
“While we are encouraged by these positive developments, we are managing through continuing weak upstream oil and gas markets and lower than projected volume in the second half. Despite these headwinds, we remain confident that our initiatives are creating a strong foundation for our continuing transformation and positioning us well for the long term.”
Total revenues for the first half of 2016 were $746 million compared with $824 million in the first six months of 2015, a 9.5-percent decline. The company reported a net loss of $9.5 million compared to net income of $12.3 million for the same period a year ago.
Equipment rental revenue in the first half was $635.7 million compared to $679.3 million in the first half of 2015, a 6.4-percent slide. However, excluding the divested France and Spain operations, equipment rental revenue was flat. Key markets, which produced 82.2 percent of the company’s rental revenue, increased 9.9 percent, largely offsetting a 30.3-percent decline in upstream oil and gas markets.
Herc is expecting adjusted EBITDA between $520 million and $560 million for the full year 2016.
Based in Bonita Springs, Fla., Herc Rentals is No. 3 on the RER 100.
