HRI

Post-Integration Execution

• The H&E acquisition integration was successfully completed in Q1 2026, and the company fully shifted focus to execution in Q2.
• Pro forma equipment rental revenue returned to year-over-year growth earlier than expected, providing momentum into the second half of 2026.
• Disciplined fleet optimization has been completed, resulting in 2% higher equivalent revenue on 3% less average fleet OEC compared to last year, with positive fleet efficiency (revenue growth outpacing fleet growth).

Strategic Growth Priorities

• Grow the core business: Top-line growth is led by national accounts, driven by robust mega project activity. The H&E acquisition added scale, fleet capacity, talent, and branch density to expand the company's role on large, complex projects.
• Expand specialty offerings: Specialty revenue grew double digits in Q2, and the company is disproportionately investing in the specialty fleet to support mega projects, new specialty branches, and cross-selling across the combined customer base.
• Elevate technology capabilities: The company continues heavy investment in its proprietary Pro-Control platform, which leverages AI and telematics to improve customer jobsite safety and efficiency. Active external users grew nearly 20% quarter-over-quarter. E-commerce channels hit a new Q2 revenue record, providing 24/7 transaction flexibility for customers.
• Responsible fleet investment: The company invests in fleet to meet visible customer demand while maintaining capital discipline and long-term balance sheet management.

Operational Updates

• Through the first half of 2026, the company added $634 million in new fleet at OEC; in Q2 alone, it disposed of $247 million in older fleet at OEC, generating proceeds equal to 46% of original cost, to fund new fleet investment and optimize fleet mix.
• The overall demand environment remains bifurcated: local market activity is generally stable with varied dynamics (some weakness in interest rate-sensitive commercial construction, while growth is seen in infrastructure, education, healthcare, and MRO), while national accounts/mega projects show the strongest growth across energy, data center, and manufacturing construction.
• A multi-year logistics transformation initiative is underway to improve routing, process discipline, cost recovery, and execution across the enlarged combined network. This initiative is separate from H&E acquisition cost synergies and will drive long-term margin improvement.
• Safety remains the non-negotiable foundation of the company's culture, underpinned by training and well-maintained equipment to support reliable customer service.

Management raised full-year 2026 guidance to reflect stronger-than-expected mega project demand, partially offset by sustained fuel and freight inflation headwinds:

• Full-year 2026 equipment rental revenue is now guided to a midpoint of $4.425 billion, representing ~5% pro forma year-over-year growth on flat average fleet OEC.
• Adjusted EBITDA is guided to a midpoint of $2.09 billion, with full-year adjusted EBITDA margin expected to see ~100 basis points of pressure from fuel and transportation inflation year-over-year.
• Full-year net fleet CapEx is now expected to be ~$900 million, up from the original plan, with the incremental investment weighted toward higher-margin specialty equipment to meet strong pipeline demand for mega projects. Total 2026 gross CapEx is expected to be $1.325 billion, with 70-75% of gross fleet purchases completed in Q2 and Q3, and the remainder in Q4.
• Incremental revenue synergies from the H&E acquisition remain on track at $100-120 million for 2026, with 60% of the incremental revenue synergy target expected to be realized in the second half. Incremental cost synergies are also on track at $90 million for 2026 (toward a full $125 million target by year end), with ~55% of the 2026 incremental cost synergy expected in the second half.
• Full-year 2026 free cash flow is guided to a range of $250-$350 million, down from prior expectations due to higher fleet investment.
• The company still expects to reach a net leverage ratio of ~3x by the end of 2027, driven by EBITDA growth from new fleet deployment.

All financial results are for the three months ended Q2 2026:

• GAAP results: Equipment rental revenue grew 23% year-over-year, while total revenue grew 20% year-over-year, driven by the full quarter ownership of the acquired H&E business (only one month of H&E was included in the prior year period). Adjusted EBITDA increased 19% year-over-year to an unspecified absolute amount, with an adjusted EBITDA margin of 40.4%. Adjusted net income was $48 million, or $1.43 per diluted share, which includes $4 million in restructuring and transformation costs.
• Pro forma combined (HERC + H&E in both year-over-year periods): Equipment rental revenue grew 2% overall, despite an average 3% reduction in fleet at original equipment cost (OEC) year-over-year. Pro forma dollar utilization increased 200 basis points year-over-year, indicating improved fleet productivity. Pro forma adjusted EBITDA margin declined 60 basis points year-over-year, and pro forma REBITDA (which excludes equipment and parts sales) margin declined 120 basis points year-over-year, driven primarily by fuel and transportation inflation. When excluding fuel inflation impacts, pro forma adjusted EBITDA margin rose 90 basis points year-over-year and adjusted REBITDA margin rose 50 basis points year-over-year.
• Specialized equipment segment: Revenue grew 10%+ year-over-year in Q2, and currently accounts for the mid-teens percentage of total revenue, with a long-term target of 20-30% revenue contribution. National accounts/mega project segment leads current top-line growth, with the company targeting a 20% long-term share of the U.S. mega project rental market (up from the prior 15% target), and the long-term target customer mix is 60% local market / 40% national/mega project.

• Sustained fuel and logistics inflation driven by Middle East geopolitical conflict has emerged as a significant macroeconomic headwind, pressuring margins in Q2 2026. Around half of the fuel cost impact cannot be directly passed through to customers (for internal fleet use and inter-regional equipment positioning), and recovery of pass-through costs can lag sudden price spikes.
• Continued high interest rates create weakness in local market commercial construction demand, creating ongoing bifurcation in overall market conditions.
• Future fuel price increases beyond current Q2 levels could create larger-than-expected margin pressure in the second half of 2026.
• All forward-looking statements are subject to general macroeconomic and industry risks that could cause actual results to differ materially from projections, as detailed in the company's SEC filings.

Q: Jerry Rivich (Wells Fargo) asked about current pricing trends and how much room there is to improve dollar utilization to reach Herc's pre-acquisition standalone levels. / A: Management noted that the Q2 dollar utilization improvement was driven largely by internal fleet optimization efforts, which occurred ahead of schedule. The pricing environment is rational and constructive, with healthy supply and demand dynamics, and the company will continue to push price as planned. Further incremental dollar utilization improvement similar to the Q1 to Q2 lift is expected in the second half of 2026, as the company continues working to align the combined fleet mix back to pre-acquisition levels.

Q: Robert Zimer (Millions Research) asked what the biggest margin improvement opportunities are, and whether the larger scale changes the company's go-to-market approach for mega projects. / A: Management identified moving specialty revenue back to a 20-30% revenue share (from mid-teens post-acquisition) as a key margin driver, alongside multi-year logistics efficiency improvements and maturing of the combined sales force. The larger platform now positions Herc to bid for primary or strong secondary roles on many more mega projects than it could previously, as large contractors prioritize partners with greater fleet capacity, broader capabilities, and leading technology.

Q: Smeag DeGray (Baird) asked what is driving the increase in CapEx: whether it is ramping the specialty business or a response to stronger actual demand, and asked for an update on H&E legacy contract pricing alignment. / A: Management clarified that the CapEx increase is purely demand-driven, with demand coming from both mega projects and specialty that are often overlapping; this is not speculative expansion of the specialty branch footprint. For H&E legacy pricing alignment, progress is on track, with most immediate pricing gains coming from aligning local market pricing to Herc best practices, while longer-term contract repricing will take more time to complete.

Q: Tammy Sicario (J.P. Morgan) asked how higher CapEx and lower 2026 free cash flow impacts medium-term deleveraging plans, and asked for the expected magnitude of Q3/Q4 fuel headwinds. / A: Management noted that there is almost no impact to 2026 leverage expectations, and the incremental CapEx is for contracted demand that will generate EBITDA growth, which is the key driver of deleveraging. The company still expects to hit its 3x net leverage target by the end of 2027. The full-year 2026 fuel headwind is expected to be ~100 basis points on adjusted EBITDA margin, with the same absolute headwind level expected in Q3/Q4 as seen in Q2, which will result in a slightly smaller percentage headwind due to higher seasonal Q3/Q4 revenue.