Headline: Herc Holdings Reports Record Third Quarter Revenue but Falls Short on Earnings Per Share Forecasts

Herc Holdings Inc. (NYSE:HRI) reported record third-quarter revenue, but rising costs balanced the strong rental demand, resulting in earnings that fell short of estimates. Following the announcement, HRI shares remained flat.

The equipment rental company reported adjusted earnings per share of $4.35, below analysts' expectations of $4.55. However, total revenue increased by 6% year-over-year to $965 million, surpassing the consensus estimate of $934.81 million.

Herc's largest segment, equipment rental revenue, rose by 13% compared to the same period last year, reaching $866 million. The company noted that rental pricing increased by 2.3% year-over-year, with volume growing by 10.7%.

Larry Silber, president and CEO of Herc Holdings, stated, "In the third quarter, we significantly outpaced overall industry growth both in total rental revenue and from an organic revenue perspective. We continue to deliver strong volume and robust price/mix performance, leveraging our broad end-market coverage, diversified product and service offerings, and increasing share in resilient urban markets."

Despite revenue growth, high costs negatively impacted profitability. Direct operation expenses rose to 38.6% of equipment rental revenue due to growth-related personnel and facility costs, up from 37.6% last year. Interest expenses also increased to $69 million from $60 million last year due to higher borrowing.

Herc raised its equipment rental revenue growth forecast for the full year 2024 to a range of 9.5% to 11%, up from the previous range of 7% to 10%. The company maintained its adjusted EBITDA forecast between $1.55 billion and $1.60 billion.

Positioned for continuous growth, Herc aims to expand its footprint through acquisitions and new branch openings, balancing strong rental demand with cost pressures. The company's ability to manage expenses will be crucial for enhancing profitability moving forward.