Herc Holdings narrows losses in Q1, reports double- digit increase in revenue

Bonita Springs-based Herc Holdings narrowed its losses in the first quarter, with revenue up by the double digits.

The parent company of Herc Rentals — a diversified equipment rental business — improved its results by $29.1 million, attributing the marked change to its strategic initiatives and business transformation efforts since its spinoff from rental car giant Hertz.

Herc reported a loss of $10.1 million, or 36 cents a share, for the quarter. That compared with losses of $39.2 million, or $1.39 a share, a year ago. 

The company posted equipment rental revenue of $369.1 million, up 15 percent from last year.

Total revenue rose nearly 11 percent over the year, to $431.3 million. It was impacted by a $7.1 million decline in the sale of revenue-earning equipment.

"Clearly our team and our strategy are delivering results," Larry Silber, the company's president and CEO, said in a conference call Wednesday.

Earnings beat Wall Street's expectations, but revenue fell short. 

On average analysts expected a loss of 69 cents a share on revenue of $2.06 billion.

More:Herc swings to profit in the fourth quarter, boosted by tax reform, rental revenue growth

Herc's strategic initiatives are focused on expanding and diversifying revenues, improving operating effectiveness, enhancing customer experience and executing disciplined capital management. 

"While we continue to invest in people, training and operations, we are also focused on improving our operational effectiveness through initiatives that are expected to gain traction as we progress through the year," Silber said.

The initiatives, he said, have helped grow customer volumes and mix and drive price increases for the company's products and services.

In the quarter, pricing increased 2.8 percent over the year. It has risen for eight straight quarters. 

Incoming customer calls increased by more than three times in the quarter, when compared with last year. 

While Herc's classic rental business continues to expand, interest is growing in its ProContractor rental tools for contractors and growing ProSolutions line, which includes portable chillers, air conditioning and heating systems, and dehumidifiers.

New technology has helped improve custom service and operating efficiencies. That includes Herc on the Go, which supplies customers with up-to-date delivery and pick-up information digitally and allows customers to sign off on documents electronically. 

In 2017:Herc finds its own way as a stand-alone company

In 2017:Herc Holdings sees third quarter earnings surge by more than 325 percent

Herc expects to spend $525 million to $575 million on its rental fleet this year, which includes new equipment.

Safety remains a top priority for the company, Silber said, and its safety metrics continue to improve.

"We are focusing on making every day a perfect day, in terms of safety," Silber said.

Based on the strong start to 2018, strong rental market fundamentals and strong economic indicators generally, Herc raised its financial outlook for the year. 

The company now expects to report adjusted earnings of $630 million to $660 million before interest, taxes, depreciation and amortization. That's up from its last estimate of $620 million to $655 million.

Herc Rentals has about 275 locations, primarily in North America. Its fleet includes aerial, earth moving and material handling equipment, as well as trucks and trailers. The company has about 4,900 employees, including a few hundred based at its headquarters in Bonita Springs. 

Shares closed at $56.38 Wednesday, up $2.57, or nearly 4.8 percent. The stock has risen more than 23 percent in the past year.