Herc Holdings Reports Q1 2025 Loss of $18 Million Amid Revenue Growth

Herc Holdings Inc. reported a decline in net income for the first quarter of 2025, posting a loss of $18 million, or $(0.63) per share, compared to a profit of $65 million, or $2.30 per share, in the same period last year. Total revenues increased to $861 million, up from $804 million in the prior year, driven primarily by a 3% rise in equipment rental revenue, which reached $739 million. The company also saw a significant increase in sales of rental equipment, which rose by 52% to $105 million, reflecting a strategic focus on fleet rotation and management.

The financial performance was impacted by a substantial increase in transaction expenses, which surged to $74 million from just $3 million a year earlier, largely due to costs associated with the pending acquisition of H&E Equipment Services Inc. Direct operating expenses also rose by 7% to $327 million, attributed to higher facility costs and increased self-insurance reserves. Despite the revenue growth, the overall profitability was hindered by these rising costs and lower fixed cost absorption during the seasonally weaker first quarter.

Herc Holdings is actively pursuing growth through strategic acquisitions, highlighted by its agreement to acquire H&E Equipment Services, which operates approximately 160 branches across the U.S. The acquisition is expected to close in mid-2025, pending customary conditions. The company has already incurred a one-time termination fee of approximately $64 million related to this transaction, which has been recorded in the current quarter's expenses. This acquisition aligns with Herc's strategy to expand its market presence and enhance its service offerings.

Operationally, Herc Holdings maintained a fleet of 453 locations in North America as of March 31, 2025. The company reported a decrease in cash and cash equivalents to $48 million from $83 million at the end of 2024. The total debt stood at approximately $4.1 billion, with significant liquidity available through its asset-based revolving credit facility and accounts receivable facility, totaling about $1.9 billion. The company continues to monitor economic conditions, including interest rates and inflation, which could impact its operations and financial performance moving forward.

Looking ahead, Herc Holdings anticipates that the acquisition of H&E will enhance its competitive position in the equipment rental market. The company is focused on managing its capital expenditures and optimizing its fleet in response to market demand. Despite the challenges posed by the current economic environment, Herc Holdings remains committed to executing its growth strategy while maintaining financial stability.