Herc Holdings reported flat rental and total revenues fourth quarter for Herc Rentals, posting $356.7 million in equipment rental revenue compared to $359.2 million in the fourth quarter of 2015 (a 0.7-percent dip). Total revenue was $405.2 million compared to $422.4 million in the year ago quarter, a 4.1-percent slide.
For the full year of 2016, Herc Rentals posted $1,352.7 million in equipment rental revenue, a 4.2-percent decline from $1,411.7 million in 2015, attributable to lower revenues in upstream oil and gas markets, divested foreign operations and negative currency impacts. Revenue growth in key markets more than offset lower revenues in upstream oil and gas markets, the company said.
Herc Holdings reported a net loss of $14 million for the fourth quarter compared to net income of $78.2 million in the year-ago quarter, primarily because of increased costs resulting from the spin-off from Hertz, including an increase in interest expense and depreciation. Although upstream oil and gas markets remained challenging, the year-over-year decline in these markets was less than in the third quarter. Also in 2015 the company realized a gain of $50.9 million on the sale of operations in France and Spain to Loxam, divested in October 2015.
“This year was a critical milestone in our ongoing business transformation process,” said Larry Silber, president and CEO. “Our strategy, which includes a number of initiatives, programs and actions, is beginning to show results on behalf of our customers, employees and shareholders. In the fourth quarter, we achieved growth in equipment rental revenues in our key markets of 6.2 percent and improved pricing in those markets by 1.5 percent compared with the prior year.
“The ongoing shift in our fleet mix is positioning our business for long-term success. The rollout of our ProContractor Tools and ProSolutions equipment and services expands and diversifies our fleet and enhances our ability to provide a wide array of equipment to meet our customers’ equipment needs. In addition, new and upgraded technologies, including our ProControl telematics systems that rolled out in the fourth quarter, further enhances the value we offer customers. We remain confident in our business strategy, our people and the growth opportunities ahead.”
In the fourth quarter, excluding divested foreign operations and currency, equipment rental revenues in key markets – defined as markets the company currently serves outside of upstream oil and gas markets – increased 6.2 percent and accounted for 84 percent of total revenues. Pricing in key markets increased 1.5 percent, Herc said, and overall pricing increased 0.5 percent year over year in the fourth quarter.
Adjusted EBITDA in the fourth quarter was $145.7 million, a decline of $18.1 million or 11.1 percent compared to the same period in 2015. Dollar utilization of 34.1 percent in the fourth quarter was impacted by lower activity in upstream oil and gas markets, the ramp-up of new locations and the addition of new fleet categories across the company’s branches.
For the full year, excluding divested foreign operations and currency, equipment rental revenues in key markets jumped 8.1 percent and accounted for 83 percent of total revenues. Net loss for the year was $20.5 million compared to net income of $111.3 million in 2015, impacted by the increase in interest expense related to debt as a stand-alone company. Adjusted EBITDA for 2015 was $536.2 million, a decline of $64.4 million from the previous year, primarily because of lower results in upstream oil and gas markets.
Silber offered guidance for Herc Rentals in 2017 based on a 3.5-percent growth rate in the North American equipment market and the anticipated positive impact of the company’s strategic initiatives. “We plan to continue to adjust our fleet mix as we grow the fleet during the year and drive improvement in our utilization rates,” he added. “We are confident that we have the right strategy and the right fleet plan to take advantage of market growth, while improving our profitability and achieving adjusted EBITDA growth.”
Herc Rentals is based in Bonita Springs, Fla., and is No. 3 on the RER 100.
