Herc Holdings Inc. Q1 FY2026 earnings call

• Completion of branch optimization program and H&E Equipment Services integration. - Herk Reynolds earned Great Place to Work certification. - Focus on leveraging new scale for growth and efficiencies, including optimizing fleet mix, enhancing specialty solutions, advancing digital capabilities. - Relentless focus on safety, with all operations achieving over 96% perfect days in first quarter and total recordable incident rate better than industry benchmark. - Bifurcated markets with local market conditions stable and national account large-scale project funding strong, mega project activity strong in first quarter. - Diversification as an important strategy for sustainable growth. - Near-term journey with fleet efficiency showing sequential improvement, specialty locations maturing as modeled.

Equipment rental revenue was up approximately 33% year over year on a GAAP basis, driven by the acquisition of H&E. On a pro forma basis, rental revenue declined 3%. Adjusted EBITDA increased 33% compared with last year's first quarter, but adjusted EBITDA on a pro forma basis was down approximately 5% due to lower margin used equipment sales. Rebita, which excludes used equipment sales, was up 30% during the first quarter with a 40% margin. Local accounts represented 47% of rental revenue in the first quarter, compared with 53% for national accounts. Fleet was $9.4 billion in original equipment costs, with pro forma fleet down nearly 2% by design, average OEC down approximately 1% on a pro forma basis versus last year, fleet expenditures up 78% pro forma, fleet disposals at OEC 20% higher year over year with realized proceeds 49% of OEC.

• Affirming full-year 2026 guidance across all metrics, Q1 came in as expected. - Rental revenue growth of 33% on an actual basis reflects combined platform contribution. - Adjusted EBITDA margin held at 39.3% consistent with last year. - Cost synergies running ahead of expectations, on track to secure incremental $90 million to fully realize $125 million target by year end. - Revenue synergies back half weighted, $100 to $120 million incremental target for 2026 intact.

Q: Rob Werthimmer asks about mega project data and ground truth.

A: Aaron says it's from both national accounts guiding and data, pipeline of plan projects is deep with more starts in back half.

Q: Meg Dobre asks about dollar utilization.

A: Aaron says first quarter played as expected, inflection point in Q2 with dollar yield, revenue, and margin expansion in back half.

Q: Jerry Rivick asks about pricing and H&E branch performance.

A: Larry says encouraged by industry fundamentals, integration is to have no H&E or HERC distinction, Q1 played as planned.

Q: Kyle Mix asks about pro forma fleet.

A: Mark says pro forma fleet was down by design, expect to load 65% of gross CapEx in back half of Q2 and Q3.

Q: Ken Newman asks about cost synergies and oil and gas exposure.

A: Mark says cost synergies are ratable, oil and gas mix is less than 10%, well positioned with $90 oil.

Q: Tammy Zakara asks about fuel and freight costs.

A: Larry says handle fuel costs through customer fees and delivery surcharge, have robust process for freight.

Q: Stephen Ramsey asks about specialty performance and disposals.

A: Larry says specialty will continue to grow, disposals in Q1 approaching 70% into retail wholesale channel.

Q: Neil Tyler asks about second half flow through.

A: Larry says anticipating margin expansion in Q3 and Q4 as initiatives come together