Herc Rentals posted $449 million in equipment rental revenue for the third quarter compared with $413.1 million in the third quarter of 2017, an 8.7-percent increase. Total revenue was $516.2 million compared to $457.6 million in the third quarter of 2017, a 12.8-percent rise. The company’s net income improved by $33.4 million to $46.2 million, or $1.60 per diluted share in the third quarter, compared to net income of $12.8 million or $0.45 per diluted share in the year-ago quarter.
Average fleet at original equipment cost increased 5.5 percent and overall pricing improved 3.2 percent in the third quarter of 2018 from last year’s third quarter. EBITDA was $201.6 million for the quarter compared to $176.7 million in the same period last year.
“We achieved strong rental revenue and adjusted EBITDA growth in the third quarter with adjusted EBITDA margin of 39 percent, marking the highest quarterly level we have recorded since becoming a stand-alone public company,” said Larry Silber, president and CEO. “Strong market demand facilitated an acceleration in pricing of 3.2 percent in the quarter, our 10th consecutive quarter of year-over-year pricing improvement. Our initiatives to better manage costs also began to gain traction as indicated by the stabilization of direct operating expenses and reduction in sales, general and administrative expenses. Our strategic plan continues to drive growth through fleet and customer diversification and we expect to steadily improve adjusted EBITDA margin with strong flow-through.”
The increase in total revenue also included an increase in sales of rental equipment of $22.4. Herc benefited from a strong used equipment market as it continued to focus on improving its equipment mix and reducing fleet age.
Dollar utilization of 39.2 percent in the third quarter of 2018 increased 50 basis points compared to Q317, reflecting improved pricing as well as customer and fleet mix diversification.
For the first nine months of the year, equipment rental revenue increased 11.6 percent to $1,210.6 million, compared to $1,084.5 million for the first nine months of 2017. The double-digit growth reflected strong growth in rental revenue from local accounts and ProSolutions and ProContractor categories.
Total revenues increased 13.5 percent to $1,433 million in the first nine months of the year compared to $1,262.8 million in 2017. The increase was aided by an increase in sales of rental equipment of $47.1 million. Pricing increased 3 percent in the nine months of 2018 compared to the same period in 2017.
Net income rose $89.8 million to $35.8 million for the nine month stretch, compared to a net loss of $54 million in the nine-month period of 2017, with strong rental revenue growth and improved results from a higher volume of sales of used equipment.
Herc reported net fleet capital expenditures of $428.4 million for the first nine months of 2018. As of Sept. 30, the company’s total fleet was approximately $3.92 billion at OEC. Average fleet age declined to about 46 months as of Sept. 30, compared to approximately 49 months as of Sept. 30.
Herc increased its guidance level for adjusted EBITDA to a range of $675 to $685 million compared to the previous range of $630 to $660 million. It lowered its guidance for net fleet capex for the year from the previous range of $525 to $575 million to the current range of $525 to $540 million.
“The continued robust market demand along with our improved operating efficiencies support the increase in our fiscal year 2018 adjusted EBITDA guidance range well above our previous guidance,” added Silber. “We also narrowed the guidance range of our net fleet capital expenditures for the full year and remain focused on a program of disciplined capital management.”
Herc Rentals is No. 3 on the RER 100.
