Herc Rentals posted $765 million in second quarter 2024 rental revenue, a record for the company, compared to $702 million in the third quarter of 2023, a 9-percent year-over-year increase. Total revenue for the quarter was $848 million compared to $802 million last year, a 5.7-percent incline. Sales of new equipment, parts and supplies were flat year over year, while service and other revenue increased more than 14 percent.
Sales of used equipment declined 21.6 percent from $83 million in Q323 to $65 million this year. The increase in rental revenue reflected positive pricing of 3.5 percent and increased volume of 6.4 percent, partially offset by unfavorable mix driven primarily by inflation. Dollar utilization increased to 41 percent in the second quarter compared to 40.3 percent a year ago.
Rental revenue for the first half of the year was $1.484 billion compared to $1.356 billion for the first six months of 2023, a 9.4-percent increase. The rental increase reflected positive pricing of 4.3 percent and increased volume of 7.2 percent, partially offset by unfavorable mix driven primarily by inflation. Sales of rental equipment decreased by $20 million during the period. Dollar utilization increased slightly to 40.4 percent compared to 40.0 percent in the prior-year period.
Total revenue for the first half of 2024 reached $1.652 billion compared to $1.542 in the first six months of 2023, a 7.1-percent increase.
“In the second quarter, we benefited from positive rental pricing, increasing fleet efficiency, and expanding market share, as we continue to significantly outpace rental-industry growth,” said Larry Silber, president and CEO of Herc Rentals. “Overall, our record second quarter revenue results came in according to our expectations. However, while national mega projects are on plan, we saw a greater deceleration in the local market's growth trajectory versus our forecast, primarily driven by the persistently higher interest-rate environment. The local-revenue deficit was essentially offset by contributions from acquisitions that added 21 locations year to date, including 10 in the second quarter. As is typical, these new acquisitions and greenfields initially generate lower incremental margins than our established local-account business, which reflected an unfavorable trade-off in profitability in the second quarter.”
Silber expects robust rental growth
"Looking to the second half of the year, mega project activity is ramping up into the peak season as anticipated. Higher revenue growth for the rest of the year and incremental adjustments made in the second quarter to better align our local cost structure should support more normal margin and EBITDA flow through for the back half of 2024. Based on current line-of-sight to market trends, we expect to deliver record full year results and are reaffirming our annual performance targets. Despite temporarily slower growth in the more rate-sensitive local market this year, the outlook for rental demand long-term is robust as the pipeline for mega projects remains strong, data center construction is accelerating, federal infrastructure spending continues to roll out, and rental penetration increases.”
As of June 30, Herc’s total fleet value was about $6.7 billion at original equipment cost. Average fleet at OEC in the second quarter increased 8 percent year over year. Average fleet age at the end of the second quarter was 47 months.
In the first half of the year, Herc completed six acquisitions with a total of 21 locations and opened 11 new greenfield locations.
In July, after Q2 ended, Herc acquired the assets of Otay Mesa Sales for approximately $264 million. Otay was a full-service general equipment rental company with about 135 employees and four locations – two in San Diego and one each in Phoenix and Yuma, Ariz.
Herc’s second quarter results do not include Cinelease, Herc’s studio entertainment equipment rental business, which is up for sale. Herc said the sale process for Cinelease is ongoing.
Herc Rentals, headquartered in Bonita Springs, Fla., is No. 3 on the RER 100.
