PARK RIDGE, N.J. — Hertz Equipment Rental Corp. will add 10 locations in 2010 as part of a companywide strategy to tap into markets emerging from the recession as well as to provide onsite support to key industries such as the petrochemical industry, the company said last month. The expansion is part of a companywide Hertz strategy that includes the opening of about 150 off-airport car rental locations.
“We're optimistic that the economy will continue to stabilize in 2010,” said Mark Frissora, chairman and CEO of The Hertz Corp. “With these strategic openings, in both the car and equipment rental markets, our goal is to be properly positioned so that we will be able to capitalize upon these key markets once the economy begins to rebound.”
HERC also posted $1.11 billion in worldwide equipment rental revenues for 2009, a 33-percent decrease compared with 2008, when total revenue was $1.658 billion. Worldwide equipment rental revenues were $274 million for the fourth quarter of 2009, a 26.1-percent decrease compared with the fourth quarter of 2008 when the company posted $370.7 million.
However, Hertz Corp. chairman Mark Frissora was bullish about future prospects for HERC. “In our equipment rental business, the volume decline is moderating,” Frissora told an investors' conference. “In the fourth quarter, equipment rental volume was down 24.2 percent, an improvement from 2009's third quarter's negative 28.7 percent. Pricing is still a concern, declining 9.5 percent in the fourth quarter. We were optimistic at the end of the year when we saw a long-awaited sign of rational pricing behavior in the market.”
Frissora added that while the first quarter of 2010 will likely be the most challenging for the company since the recession began, he said the company expected HERC volumes “to improve on a sequential quarterly basis throughout the year with the potential for year-over-year growth in the second half.”
Frissora said geographically there are pockets of recovery. “For example, in Florida, one of the first markets to enter the recession, equipment rental volume is beginning to actually turn positive year over year. And in Canada, we are benefitting from stable oil prices and the resumption of various plant refurbishment projects. As a balance to pursuing new top line strategies in industrial and entertainment markets, we are further tightening Hertz's cost structure by rationalizing locations and implementing long-term process improvements. Through this two-pronged approach, we achieved a corporate EBITDA margin of 40.5 percent for equipment rental in the fourth quarter. Adjusted pre-tax profit margin was 9.4 percent. This business is typically the strongest contributor to total company profit.”
Frissora added that the equipment rental division has the ability to create a dramatic change in the company's profitability on just a small amount of revenue growth. “As today's negative volumes continue moving in the right direction, we could see some of that growth by the second half of 2010 as year-over-year comparison gets much easier and the industrial market continues its recovery.”
The Park Ridge, N.J.-based company is No. 4 on the RER 100. It has more than 330 locations in the United States, Canada, China and Europe and recently announced plans for a joint venture in Saudi Arabia.
