In its first full quarter as a standalone equipment rental company Herc Rentals reported $360.3 million in equipment rental revenues, compared with $373.2 million in the third quarter, a 3.5-percent dip. Total revenue was $403.6 million for the quarter, compared to $431.8 million in the year-ago period. Year-over-year volume comparisons were primarily affected by the absence of operations in France and Spain, which Hertz divested in October 2015, as well as continuing headwinds in upstream oil and gas markets and spin-off costs.
"We continued to make good progress on our strategic initiatives in our first quarter as a stand-alone public company and remain confident that we are on track to achieve our long term operational and financial performance targets," said Larry Silber, president and CEO. "Of note, for the third quarter, in our key markets we achieved rental revenue growth of 7.2 percent and realized improved pricing of 1.8 percent. "The ongoing rollout of our ProContractor Tools and ProSolutions equipment and services continues to expand and diversify our fleet and revenue mix and contributed to improved pricing during the quarter. Our focus on operating efficiency produced another solid quarter in fleet available for rent, which enables us to meet more of our customers' equipment needs. Overall, our third quarter performance reinforced our confidence in our business strategy, our people and the growth opportunities ahead.”
Excluding divested foreign operations and currency, equipment rental revenue in key markets increased 7.2 percent and accounted for 84 percent of the total. Herc defined key markets as those outside of upstream oil and gas markets. Adjusted EBITDA in the third quarter was $152.1 million, a decline of $8.0 million or 5 percent, versus the prior year period primarily because of divested foreign operations and currency. Growth in key markets more than offset the impact of lower results in upstream oil and gas markets.
Continued improvement in branch operating efficiencies reduced average fleet unavailable for rent to 13 percent in the month of September 2016 compared with 13.8 percent in September 2015.
Dollar utilization increased to 35.4 percent in the third quarter of 2016, an improvement of 190 basis points from the second quarter. Compared with the third quarter of 2015, dollar utilization declined 60 basis points, impacted by lower results in upstream oil and gas markets.
Equipment rental revenue in the first nine months of 2016 was $996.0 million compared with $1.05 billion in the comparable period in 2015, a decline of 5.4 percent, which was attributable to divested foreign operations and currency. Revenue growth in key markets offset lower revenues in upstream oil and gas markets. Excluding divested foreign operations and currency, equipment rental revenue in key markets increased 8.9 percent and accounted for 83.0 percent of the total.
Herc Rentals reported net fleet capital expenditures of $360 million for the nine-month period, on track with its full year guidance. At the end of the third quarter, Herc had rental equipment of approximately $3.62 billion, at original equipment cost. The average OEC for the third quarter increased 4.4 percent compared to the year-ago frame.
Herc Holdings confirmed that is expects adjusted EBITDA for the full year to be in the range of $520 million to $560 million.
Headquartered in Bonita Springs, Fla., Herc Rentals is No. 3 on the RER 100.