Herc Holdings Q3: Earnings Miss, Sales Jump 22%, Revised Guidance & More

Herc Holdings Inc. HRI reported third-quarter FY23 sales growth of 22% year-on-year to $908 million, beating the analyst consensus estimate of $896.77 million.

Adjusted EPS of $4.00 missed the analyst consensus of $4.15.

Equipment rental revenue increased 8.4% Y/Y to $765 million.

Adjusted EBITDA of $410 million increased 19% in the quarter under review with adjusted EBITDA margin at 45.2%

Rental pricing increased 6.9% year-over-year. As of September 30, 2023, the company's total fleet was approximately $6.2 billion at OEC. The average fleet at OEC in the third quarter increased 19% compared to the prior-year period and increased 24% year-to-date. 

The average fleet age was 45 months as of September 30, 2023, compared to 49 months in the comparable prior-year period.

The company said it is exploring strategic alternatives for Cinelease studio entertainment business.

"Today, we also are announcing that we will begin exploring strategic alternatives for Cinelease, our studio management and lighting and grip equipment rental business. This decision was made due to the changing dynamics for lighting and grip rental providers in the film and studio entertainment industry, which has shifted to requiring significant capital investment in studios. For Herc to allocate capital for growth in this new real-estate-focused business model would be a divergence from our stated strategy," said Larry Silber, president and chief executive officer. 

Outlook: Herc narrowed the adjusted EBITDA outlook to $1.45 billion-$1.50 billion from $1.45 billion-$1.55 billion.

The guidance range for the full year 2023 adjusted EBITDA reflects an increase of 18% to 22% compared to the full year 2022 results.

Price Action: HRI shares are trading lower by 2.31% at $104.73 on the last check Tuesday.