Herc Holdings — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues increased 5% to $1,364 million in Q3 2026 compared to $1,304 million in the prior-year period.
• Equipment rental revenue reached a record $1,254 million, a 12% increase year-over-year.
• Net income was $104 million ($3.10 per diluted share) in Q3 2026, compared to $30 million ($0.90 per diluted share) in the prior year.
• Adjusted net income was $131 million ($3.91 per diluted share) in Q3 2026, compared to $74 million ($2.22 per diluted share) in the prior year.
• Adjusted EBITDA increased 9% to $603 million in Q3 2026, with an adjusted EBITDA margin of 44.2% compared to 42.3% in the prior year.
• For the nine months ended September 30, 2026, total revenues increased 17% to $3,707 million compared to $3,167 million.
• Nine-month net income was $99 million ($2.96 per diluted share), compared to a net loss of $23 million ($0.75 per share) in the prior year.
• Nine-month adjusted net income was $186 million ($5.55 per diluted share), compared to $170 million ($5.54 per diluted share) in the prior year.
• Nine-month adjusted EBITDA increased 18% to $1,538 million, with a margin of 41.5% compared to 41.0% in the prior year.
• Direct operating expenses were $532 million (42.4% of equipment rental revenue) in Q3 2026, up from $467 million (41.6%) in the prior year.
• Selling, general and administrative expenses were $178 million (14.2% of equipment rental revenue) in Q3 2026, down from $166 million (14.8%) in the prior year.
• Interest expense was $126 million in Q3 2026, down from $134 million in the prior year.
• Net rental equipment capital expenditures for the nine months were $737 million, compared to $529 million in the prior year.
• Free cash flow for the nine months ended September 30, 2026, was $133 million, matching the $133 million reported in the prior year period.

Guidance and Future Outlook:

• The Company raised its full-year 2026 equipment rental revenue guidance to $4.475 billion to $4.550 billion (previously $4.375 billion to $4.475 billion).
• Full-year 2026 adjusted EBITDA guidance was raised to $2.10 billion to $2.15 billion (previously $2.05 billion to $2.125 billion).
• Full-year 2026 net rental equipment capital expenditures guidance was raised to $1.0 billion to $1.1 billion (previously $850 million to $950 million).
• Full-year 2026 gross capital expenditures guidance was raised to $1.45 billion to $1.60 billion (previously $1.25 billion to $1.40 billion).
• Growth in the large-project pipeline continues to exceed expectations, with expanding opportunities in data centers, infrastructure, manufacturing facilities, and energy projects.
• The Company expects to continue gaining market share by capturing an outsized portion of forecasted higher construction spending in 2026.

Business Segments and Product Lines:

• Specialty solutions business experienced double-digit expansion.
• Revenue synergies from the H&E acquisition were an increasing contributor, consistent with second-half weighting, as new specialty branches ramped up.
• Cross-selling, broader fleet access, and national account penetration advanced.
• Local-market demand remained stable.
• Sales of rental equipment decreased by $66 million in Q3 2026 and $29 million for the nine months, as disposal volume was elevated in the prior year to optimize the fleet post-H&E acquisition.
• The Company opened two previously planned greenfield locations in the third quarter.

Market and Competitive Landscape:

• The Company leverages scale, a broad equipment offering, deep customer relationships, and superior project execution to capitalize on accelerating customer demand.
• Robust mega-project volume led the strong performance.
• The industry is cyclical, and the Company depends on levels of capital investment and maintenance expenditures by customers.
• The Company faces competition, including potential downward pricing pressures or the inability to increase prices.

Risks and Challenges:

• Direct operating expenses were elevated due to increased transportation and fuel expenses resulting from macroeconomic headwinds.
• Higher field incentive compensation, driven by outperformance in fleet efficiency, contributed to increased operating expenses.
• Depreciation of rental equipment increased due to higher average fleet size, particularly from the H&E acquisition.
• Non-rental depreciation and amortization increased due to amortization of acquisition intangibles, specifically the H&E customer relationship intangible asset.
• Interest expense for the nine months increased to $380 million from $282 million due to new debt issued in June 2025 to fund the H&E acquisition.
• Risks include the cyclical nature of the industry, dependence on key suppliers, reliance on IT systems, ability to attract talent, residual value risk on fleet disposition, climate change impacts, execution of growth strategy, significant indebtedness, and realization of H&E acquisition benefits.

Management Commentary and Tone:

• CEO Larry Silber described the third quarter as "exceptional," citing the team's ability to leverage scale and fleet management to drive a 360 basis point improvement in dollar utilization.
• Dollar utilization reached 43.5% in Q3 2026, up from 39.9% in the prior year, driven by fleet efficiency and a favorable shift to higher-return fleet.
• Silber noted that growth in the large-project pipeline exceeds expectations and that the Company's ability to serve complex projects reflects increased scale and technological innovation.
• The tone was confident, highlighting record revenues, record adjusted EBITDA, and the raising of full-year guidance for the second time in 2026.

Other Key Points:

• Net debt was $8.0 billion as of September 30, 2026, with a net leverage ratio of 3.90x.
• Liquidity as of September 30, 2026, was approximately $2.1 billion, comprising cash and cash equivalents and unused commitments under the ABL Credit Facility.
• The Company declared a quarterly dividend of $0.70 per share, paid on September 16, 2026, to shareholders of record as of September 2, 2026.
• The total fleet was approximately $10.0 billion at OEC as of September 30, 2026.
• Average fleet at OEC increased 1.7% in Q3 2026 compared to the prior year.
• Average fleet age was 46 months as of September 30, 2026, compared to 45 months in the prior year.
• The Company employs approximately 10,200 people across 615 locations in North America.
• The H&E acquisition continues to drive revenue synergies and fleet size growth, with non-rental depreciation and amortization increasing 50% for the nine months due to intangible asset amortization.