Herc Rentals posted $786 million in the fourth quarter of 2022, compared to $578 million in the fourth quarter of 2021, a whopping 36-percent increase. The jump was primary related to a $170.7 million increase in equipment rental revenue with a 6.6-percent pricing increase and a 28.6 percent volume rise. Sales of rental equipment also increased by $35.2 million during the period. Equipment rental revenue increased from $542.4 million in the fourth quarter of 2021 to $713.1 million in the recently concluded quarter, a 31.5-percent hike.
Dollar utilization decreased to 43.5 percent compared to 44.6 percent in the year-ago period, primarily because of the mix of equipment on rent.
Direct operating expenses increased 26.2 percent during the quarter compared to the previous year, primarily related to strong rental activity and increases in payroll and related expenses associated with additional headcount, plus higher maintenance costs, fuel prices and facilities expenses. Depreciation of rental equipment increased 29 percent or $33 million to $146.8 million because of higher year-over-year average fleet size. Non-rental depreciation and amortization increased 35.4 percent of $6.8 million to $26 million because of amortization of acquisition intangible assets.
For the full year, total revenues were $2,738.8 million compared to $2,073.1 million in 2021, a 32.1-percent incline, related to an increase in equipment rental revenue of $641.1 million, reflecting a 5.8-percent pricing hike and a 31.8-percent volume climb. Dollar utilization increased to a record 43.5 percent compared to 43 percent in 2021. Depreciation of rental equipment increased 27.4 percent or $115.2 million, to $535.9 million during 2022 because of a higher year-over-year average fleet size.
"From beginning to end, 2022 was an exceptionally strong year for us, with record performance across key financial metrics," said Larry Silber, president and CEO. "Operating momentum and market share growth continued in every region driven by robust demand, improved pricing, strategic fleet investments, end market diversity, and greater branch-network efficiencies.
"Through the hard work of the last several years, we are better positioned than ever to capitalize on a variety of growth avenues, including local market penetration, increased rentals of higher-margin specialty equipment, and trends relating to the multi-year fiscal stimulus and re-shoring mega projects. As a market leader with a strong reputation, broad-based capabilities and service solutions, in 2023 we expect to continue to outpace industry expansion and capitalize on operating leverage while laying a foundation for long-term, profitable growth."
Boosting the capex
Herc nearly doubled its rental equipment capital expenditures in 2022, spending $1,168.5 million to buy equipment compared to $593.8 million in 2021. As of December 31, 2022, the company’s total fleet was approximately $5.6 billion at original equipment cost. Average fleet at OEC in the fourth quarter increased year over year by 31.1 percent, compared to the prior-year period and increased by 30.5 percent for the full year. Average fleet age was 48 months as of Dec. 31, 2022, compared to 49 months at the end of 2021.
"As a leader in an industry where scale matters, we expect to continue to gain share by capturing an outsized position of the forecasted higher construction spending in 2023 by investing in our fleet, capitalizing on strategic acquisitions and greenfield opportunities, and cross selling our diversified product portfolio," added Silber.
Herc Rentals is based in Bonita Springs, Fla. The company is No. 3 on the RER 100.