Herc Rentals posted $542.4 million in equipment rentals in the fourth quarter of 2021, compared to $427.3 million in the fourth quarter of 2020, a 26.9-percent leap. Its total revenue was $578 million, compared to $520.4 million a year ago, an 11.1-percent jump. The company reported net income of $71.8 million, or $2.36 per diluted share, in the fourth quarter of 2021, compared to $35.5 million or $1.19 per diluted share in the fourth quarter of 2020, essentially doubling net income year over year.
Pricing improved 3.5 percent in Q421 compared to the fourth quarter of 2020. Dollar utilization increased to 44.6 percent compared to 40.6 percent in the prior-year period.
"We continued our 'shift into high gear' with an excellent fourth quarter," said Larry Silber, president and CEO. "Rental revenue increased 26.9 percent over the prior year and dollar utilization was a record 44.6 percent. Outstanding execution by our operations and field support team was enhanced by strong demand in our markets and a positive operating environment.
"Adjusted EBITDA for the full year increased 29.8 percent to $894.7 million compared with 2020 and 20.7 percent compared to pre-pandemic 2019. The healthy momentum in volume and rate trends we closed with [at the end of] 2021 are expected to contribute to strong growth in 2022."
Adjusted EBITDA increased 31.1 percent to $256.5 million compared to $195.6 million in the prior-year period. Adjusted EBITDA margin increased 680 basis points to 44.4 percent compared to 37.6 percent in the prior-year period.
For the full year, equipment rental revenue increased 23.8 percent to $1,910.4 million, compared to $1,543.7 million in 2020. Total revenues were $2,073.1 million compared to $1,781.3 million in 2020, a 16.4-percent hike. The year-over-year increase was primarily related to the increase in equipment rental revenue of $366.7 million, partially offset by a reduction in sales of rental equipment of $85.4 million. The reduction in sales of rental equipment resulted from strong rental demand and the strategic management of fleet to maximize fleet size and minimize the sales of rental equipment.
Pricing increased 2.1 percent year over year. Dollar utilization jumped to 43 percent compared to 36.1 percent in 2020.
Herc Hikes Capex
The company reported net rental equipment capital expenditures of $486.9 million for 2021. Gross rental equipment capital expenditures were $593.8 million compared to $344.1 million in 2020. Proceeds from disposals were $106.9 million compared to $192.5 million last year.
The company raised its full year 2022 guidance range for adjusted EBITDA to $1,075 million to $1,175 million and affirmed the net capital expenditure guidance range of $820 million to $1,120 million.
Average fleet age was 49 months as of December 31, 2021, compared to 46 months at the end of 2020.
Herc has completed the acquisition of seven equipment rental companies in the fourth quarter of 2021 and 12 since December 30, 2020, for a total net cash outlay of approximately $477 million. The acquisitions totaled 37 locations in Texas, California, Illinois, New Hampshire, Tennessee, New Mexico, Virginia, Maryland, New Jersey, Pennsylvania and the province of Ontario, Canada.
"We shared our 2021 to 2024 annual goals for organic CAGR growth of 12 percent to 15 percent in rental revenue and 17 percent to 20 percent in adjusted EBITDA at our recent Investor Day," said Silber. "This quarter gets us into high gear and off to a good start on the road to achieve these goals. We have strong momentum and intend to invest in new locations and rental equipment to enhance our urban density and improve our operating leverage and scale. We are focused on balancing our investment growth options between organic and acquisition growth and our overall return to shareholders.
"In addition, we announced a 15-percent increase in our quarterly dividend, payable in the first quarter. We believe that our shareholder base should benefit from the strong growth in our results by sharing in our anticipated earnings growth through dividend payments."
Based in Bonita Springs, Fla., Herc Rentals is No. 3 on the RER 100. It now has 312 locations.
