Worldwide equipment rental decreased 1 percent in the first quarter for Hertz Equipment Rental Corp., although excluding currency effects it increased 2 percent compared to a year ago.
In North America in the first quarter, total equipment rental revenue remained flat at $334 million. Revenue growth was tempered by accelerating weakness in oil and gas regions as well as a lower level of new equipment and parts sales. The United States represented 82 percent of HERC’s North America rental-related revenue, with Canada making up the remaining 18 percent.
Equipment rental pricing was 2 percent higher compared with the first quarter of 2014. Volume in North America increased 4 percent in the quarter. North American time utilization was 62 percent, which was flat year over year. Dollar utilization was 35 percent, also flat.
Upstream oil-and-gas revenue represented roughly 15 percent of North American equipment rental and rental-related revenue in the first quarter of 2015. Upstream revenue was down 13 percent in the quarter as major oil producers reduced spending. In contrast, all other North American rental and rental-related revenue increased 6 percent, excluding currency effects.
“The pressure from upstream oil and gas weakness came on faster than our internal forecast, impacting both revenue and profitability in the latest quarter,” said Brian MacDonald, president and CEO of HERC. “Our exposure in Northern Alberta, West Texas and Oklahoma is overshadowing the progress we have made in diversifying our top line into growth markets. As a result, we are reducing operating costs and capital spending to reflect our revised demand outlook.”
Hertz Corp. said it remains committed to the separation of the equipment rental business and is continuing to advance those plans, although the actual separation will not occur until after the company has completed its accounting review, filed its financial statements with the SEC and completes the carve out and audit of financial statements for the equipment rental business and requisite SEC filing activities.
HERC is headquartered in Naples, Fla.