Herc Rentals Urban Market Growth Strategy Outpacing the Rental Industry, CEO Silber Says
By Michael Roth
Herc Rentals has acquired 26 locations and opened 16 greenfield branches in the first nine months of 2024, CEO Larry Silber told a conference call of investors last week, putting Herc among the fastest-growing equipment rental giants. Silber said the acquisitions will drive market share and revenue efficiencies in key metropolitan areas, in line with Herc’s urban market growth strategy.
“In addition to desirable locations, the acquisitions bring complementary fleet categories, valuable new team members with a strong cultural fit, and new local account opportunities,” Silber said.
Silber said Herc increased its specialty fleet Capex this year “to support share of wallet opportunities, as well as the incremental demand from mega projects and potential business with customers in newer end market verticals where we’re capturing greater penetration.”
Year-to-date, we've acquired 26 locations and opened 16 greenfield branches that will drive market share and revenue efficiencies in key metropolitan areas, in line with our urban market growth strategy. In addition to desirable locations, the acquisitions bring complementary fleet categories, valuable new team members with a strong cultural fit, and new local account opportunities.”
Mega projects lead the way
Silber talked about Herc’s concentration on large projects. “This year’s operating performance really emphasizes the advantages of Herc’s mega project participation, customer project and geographic diversity, specialty equipment and services, strategic acquisitions, and, of course, pricing discipline.
“Rental rates were up 2.3 percent year over year in the quarter and 3.5 percent year-to-date. That’s on top of a tough comp of 7.2 percent over the same nine-month period last year and a 5.4-percent rate increase in the first three quarters of 2022. Further pricing is improving on a sequential basis, reflecting our leadership, as well as ongoing industry disciple. And based on benchmark data, Herc volume continues to significantly outpace overall rental market growth on both an organic and total revenue basis.”
As for rental industry fundamentals and current ongoing prospects, Herc senior vice president and chief operating officer Aaron Birnbaum said: “The trends of rental over ownership, reshoring manufacturing, fortifying North America’s infrastructure, modernizing the electrical grip, rapid growth in AI and data centers, and the move toward clean energy, all represent significant future opportunities for Herc as a leading equipment rental company with a full suite of capabilities, products, and best-in-class services.
“While the current period of transition from the post-COVID peak to a more normal local operating environment was challenged this year with the higher interest rates and some macroeconomic uncertainty, our much more diversified position today provides the resiliency to continue to drive revenue growth and deliver strong operating margins.”
Birnbaum added that on the national account side of the business, “we're capitalizing on continued government and private funding for new projects in areas like battery storage, energy, infrastructure, semiconductor, LNG plants, and data centers.”
For more on Herc’s third quarter results, go to: https://www.rermag.com/news-analysis/headline-news/article/55237480/herc-rentals-rental-revenue-jumps-132-percent-in-third-quarter
