Larry Silber, chairman and CEO of Herc Rentals, was bullish about the company’s expectations and prospects over the next few years as he spoke to a conference call of investors after Herc last week shared its full-year 2018 and fourth quarter 2018 results.
“American Rental Association continues to forecast strong growth, particularly in the Southwest and Southeast with annual compounded growth rates higher than 6 percent over the next five years,” Silver said. “To take advantage of that growth, in 2018, we continue to add urban locations to increase the scale of our operations in targeted metropolitan areas. During 2018, we opened new greenfield locations in St. Peters, Missouri, which is part of the St. Louis metropolitan market; and in Covington, Georgia, supporting the Atlanta metropolitan market. Additionally, we opened new locations outside of Seattle, Washington, and Dallas, Texas. In 2018, we closed six locations in Canada, which were unlikely to achieve our long-term performance requirements. These closures were reflected in the $5.3 million of restructuring costs we have reported for the full year 2018. We intend to add approximately four to six new greenfield locations during 2019 to support our urban market strategy.”
And while growth in its national accounts segment is important, Silber was also particularly positive about what the company calls “local rental revenue”, generated from customers operating in a particular area rather than nationally or multi-regionally.
“Our strategy is driving further diversification of our customers and markets as well as industry mix,” Silber said. “Local rental revenue grew almost 17 percent year over year and accounted for about 57 percent of rental revenue in 2018. National account revenue represents about 43 percent of the total and continues to grow as well. Our contractor and other customers’ equipment rental revenue grew the fastest with an increase of 14 percent and 16 percent respectively over the prior year.
“Contractors represented 35 percent of equipment rental revenues followed by industrial with 29 percent. Other customers include commercial and retail service, hospitality, healthcare, recreation, entertainment and special events which represented 19 percent of equipment rental revenue and the infrastructure in government sectors posted at 17 percent. Growth in new customer accounts continued to be quite strong throughout the quarter maintaining the solid pipeline for our future potential growth opportunities for us.”
For an overview of Herc Rentals’ fourth quarter and full year 2018 performance, visit: https://rermag.com/wall-street-beat/herc-rentals-hikes-total-revenue-127-percent-2018