Herc Holdings Stock

Herc Holdings Inc. is one of the leading equipment rental suppliers in North America.

The company conducts substantially all of its operations through subsidiaries, including Herc Rentals Inc. (Herc). The company is a full-line equipment rental supplier offering a broad portfolio of equipment for rent. In addition to its principal business of equipment rental, the company sells used equipment and contractor supplies, such as construction consumables, tools, small equipment and safety supplies; provide repair, maintenance, equipment management services and safety training to certain of its customers; offer equipment re-rental services and provide on-site support to its customers; and provides ancillary services, such as equipment transport, rental protection, cleaning, refueling and labor.

The company’s classic fleet includes aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction and lighting. The company’s equipment rental business is supported by ProSolutions, its industry-specific solutions-based services, which includes power generation, climate control, remediation and restoration, pump, trench shoring, studio and production equipment, and its ProContractor professional grade tools.

Strategy

The company key elements of the company’s strategy are to grow the core and expand specialty; elevate technology; integrate environmental, social and governance (ESG); grow the core and expand specialty; and elevate the use of technology across the rental consumption chain by making significant investments in its digital platforms and are leveraging the knowledge that it has in serving customers for over fifty years to ensure that those investments create value throughout the rental experience;

Products and Services

The company’s principal products and services are described below.

Equipment Rental—The company offers for rent, on a daily, weekly or monthly basis, equipment from a variety of leading, globally known original equipment manufacturers, with which it maintains strong relationships. As of December 31, 2023, the average age of the company’s equipment rental fleet was 45 months.

Sales of Used Rental Equipment—The company routinely sells its used rental equipment to manage repair and maintenance costs, as well as the composition, age and size of its fleet. The company disposes of its used equipment through a variety of channels, including retail sales to customers and other third parties, sales to wholesalers, brokered sales and auctions.

Sales of New Equipment, Parts and Supplies—The company also sells new equipment. The types of new equipment that it sells vary by location and include a variety of ProContractor tools and supplies, small equipment (such as work lighting, generators, pumps, and compaction equipment and power trowels), safety supplies and expendables.

Customers

The company has a wide range of customers across diverse end markets with a large base of local small to mid-size customers to large complex national organizations leveraging its core and specialty solutions or equipment. The principal end user markets the company serves, based on its customers’ North American Industrial Classification System (NAICS) codes, are as follows:

Contractors - The company serves various types of general contractors and subcontractors in non-residential and residential construction, specialty trade, restoration, remediation and environmental and facility maintenance. Contractor business represented approximately 36% of its equipment rental revenue for the year ended December 31, 2023.

Industrial - The company serves industrial customers across a broad range of industries, including refineries and petrochemical operations, industrial manufacturing, including automotive and aerospace, power, energy, renewables, metals and mining, agriculture, pulp, paper and wood and food and beverage. Industrial customers represented approximately 27% of its equipment rental revenue for the year ended December 31, 2023.

Infrastructure and Government - The company serves its infrastructure customers across a wide range of projects, such as streets, roads and highways, bridges, sewer and waste disposal, water treatment, railroads and other transportation and utilities, as well as all governmental spending. Infrastructure and government represented approximately 16% of its equipment rental revenue for the year ended December 31, 2023.

Commercial Facilities - The company serves commercial facility customers within an array of industries, including commercial warehousing, education, healthcare, data centers, hospitality and retail. Commercial facilities customers represented approximately 14% of equipment rental revenue for the year ended December 31, 2023.

Other Customers - In addition, the company serves a variety of other customers through sporting and live events, entertainment production, special event management and non-account customers. These customers collectively represented approximately 7% of its equipment rental revenue for the year ended December 31, 2023.

The company operates in mid-size and large urban markets serving a wide range of industries, which enables it to reduce exposure to any single customer or market, with no single customer making up more than 3% of its equipment rental revenue for the years ended December 31, 2023.

Sales and Marketing

The company markets and sells its services through a variety of complementary programs. Through a dedicated sales team, the company provides its customers with support services, market and application expertise, and sales offerings. For example, the company has sales teams committed to servicing various categories of its customer base, including clients in the construction, industrial, government and entertainment industries. The company’s product experts oversee general rentals and specialty products, providing application support and program management services to its clients. Through its national accounts program, its dedicated sales team provides its large customers with support across a number of diverse geographic, functional and equipment sectors. The company also provides client support via its sales coordinators, reservation centers and customer care centers to help customers with their comprehensive needs.

The company advertises its broad range of offerings through industry catalogs, participation and sponsorship of industry events, trade shows, and via the Internet. Additionally, through its website and mobile apps, its customers can arrange for the rental of equipment, browse and purchase used equipment, review its service offerings and manage their fleet and overall account with it.

Competition

Aggreko is a global competitor in the power generation rental markets in which the company also participates.

Seasonality

The company’s business is seasonal, with demand for its rental equipment tending to be lower in the winter months, particularly in the northern United States and Canada. The company’s equipment rental business, especially in the construction industry, has historically experienced decreased levels of business from December until late spring and heightened activity during its third and fourth quarters (year ended December 31, 2023) until December. The company has the ability to manage certain costs to meet market demand, such as fleet capacity, the most significant portion of its cost structure. For instance, to accommodate increased demand, the company increases its available fleet and staff during the second and third quarters of the year. To reduce the impact of seasonality, the company focuses on expanding its customer base through specialty products that serve different industries with less seasonality and different business cycles.

Intellectual Property

The company views the name and primary mark Herc Rentals and Herc as material to its business as a whole.

History

Herc Holdings Inc. was founded in 1965. The company was incorporated in Delaware in 1965.