Herc NYSE: HRI executives used the company’s first-quarter 2026 earnings call to highlight the completion of two major initiatives—the integration of H&E Equipment Services and Herc’s branch optimization program—while reiterating expectations for a second-half acceleration in revenue and margin performance.
Integration of H&E and branch optimization complete
Chief Executive Officer Larry Silber said the integration of H&E Equipment Services, which he described as “the largest acquisition in our industry,” is now complete alongside the company’s branch optimization program. “With integration behind us, our focus shifts fully and decisively to leveraging our new scale to drive growth and efficiencies through execution,” Silber said.
Silber emphasized the company’s culture during the integration, noting Herc Rentals received its Great Place to Work certification for the third consecutive year, including feedback from approximately 2,500 new employees brought in through the acquisition.
Looking forward, Silber said the company is focused on optimizing fleet mix by market, driving network density, and capturing efficiencies from a now “30% larger branch network.” He also highlighted ongoing investments in specialty solutions and digital initiatives, including ProControl by Herc Rentals and the company’s e-commerce platform. Silber said e-commerce revenue reached “an all-time record high” in the first quarter.
Operational focus: safety, fleet alignment, and specialty buildout
President Aaron Birnbaum framed 2026 as an execution year built on the expanded network and investments in fleet, systems, and people, while underscoring safety as “non-negotiable.” Birnbaum said the company’s operations achieved over 96% “perfect days” in the quarter on a branch-by-branch measurement and that Herc’s total recordable incident rate remained better than the industry benchmark of 1.0.
Birnbaum also detailed fleet positioning and the company’s approach to utilization. He said fleet totaled $9.4 billion in original equipment cost (OEC) and that Herc entered 2026 with pro forma fleet down nearly 2% “by design” as the company focused on putting “the right equipment in the right markets with the right mix.” By the end of the first quarter, average OEC was down about 1% on a pro forma basis versus last year, which Birnbaum tied to a focus on utilization improvement.
He said first-quarter fleet investments were $183 million, aimed at growth opportunities and supporting new specialty locations. Fleet disposals at OEC were 20% higher year-over-year, and of the $281 million of first-quarter disposals, realized proceeds were 49% of OEC, up from 45% in the year-ago quarter. Birnbaum attributed the improvement to a healthy used equipment market and “focused selling into the higher return wholesale and retail channels.”
Birnbaum said conditions remained “bifurcated.” He characterized local markets as stable, with government, infrastructure, MRO, and institutional construction offsetting a “still moderate commercial sector.” On the national account side, he said funding for large projects remained strong, with activity concentrated in manufacturing, LNG, renewables, and data centers. Birnbaum said Herc is winning its “targeted 10%-15% share” of those opportunities.
In the quarter, local accounts represented 47% of rental revenue compared with 53% for national accounts. Birnbaum reiterated the company’s long-term target of 60% local and 40% national, adding that the local mix is expected to improve with seasonal demand and a recovery in local activity.
Financial results: acquisition-driven growth, pro forma pressure
Chief Financial Officer Mark Humphrey said equipment rental revenue rose approximately 33% year-over-year on a GAAP basis, driven by the H&E acquisition. On a pro forma basis, rental revenue declined 3%, which Humphrey called “a meaningful sequential improvement” from the fourth quarter. He said the acquired business had been experiencing revenue pressure prior to close and that Herc has been working to reverse that through fleet optimization, sales training, and network alignment.
Adjusted EBITDA increased 33% from the prior-year quarter, aided by higher rental revenue and 31% more used equipment sales. On a pro forma basis, adjusted EBITDA was down about 5%, with Humphrey citing mix pressure from higher used equipment sales (which carry a lower margin than rentals), static local demand, and the lower margin profile of the acquired business. He said EBITDA excluding used equipment sales was up 30% in the quarter, and said EBITDA margin was 40%, impacted by the acquired business.
Humphrey said the first-quarter net loss included $5 million of transaction costs tied primarily to the H&E deal, while adjusted net income was $7 million.
The company generated $94 million of free cash flow in the quarter. Humphrey said pro forma leverage was 3.96x, which he said was in line with expectations as stronger 2025 quarters from H&E roll out of the trailing 12-month calculation. He said leverage is expected to remain relatively consistent through the year before improving “meaningfully” at year-end as revenue synergies lift EBITDA in the second half. Silber reiterated an expectation to return to the top of the company’s targeted 2x–3x leverage range by year-end 2027.
Guidance affirmed; synergies and second-half inflection emphasized
Humphrey said Herc is affirming full-year 2026 guidance “across all metrics,” calling first-quarter performance consistent with the company’s plan. Executives repeatedly pointed investors to a second-half inflection, with Humphrey telling analysts he expects an inflection point “sometime inside of Q2,” followed by improvement in dollar utilization, revenue growth, and margin expansion into the back half of the year.
On synergies, Humphrey said cost synergies are “running ahead of expectations,” and the company remains on track to secure an incremental $90 million in 2026 to fully realize a $125 million target by year-end. He described the cadence as “reasonably ratable” and “slightly back half loaded.” Revenue synergies were described as back-half weighted, with Humphrey reaffirming an incremental $100 million to $120 million target for 2026.
During Q&A, management also addressed fleet and specialty investments. Humphrey said the company began the year down about two points in pro forma fleet and was still down about one point exiting the quarter, consistent with plan. He added that the company expects to “load 65%” of gross capex into the business between the back half of the second quarter and the third quarter. Management also said capex would be “over-indexed” to specialty fleet to support the expanded specialty footprint.
On specialty, Silber said the business delivered “double-digit growth” in the quarter and is expected to continue growing across megaproject, national account, and local market activity, while declining to provide more granular disclosure. In a separate question on revenue synergies tied to cross-selling specialty into the acquired customer base, management said the company is “on the plan where we need to be” exiting the first quarter and expressed confidence in execution through the remainder of the year.
Asked about pricing, Humphrey said the company does not comment specifically on price but said it is “encouraged by the fundamentals” and described market behavior as “rational and constructive” as the company exited the first quarter.
Management also discussed exposure to oil and gas and cost recovery mechanisms tied to fuel and freight. Executives said oil and gas represents less than 10% of the business both before and after the acquisition. On fuel, management described cost impacts across internal vehicles, refueling rental equipment, and logistics, noting the company charges refueling fees when equipment is returned less than full and uses delivery fees and an indexed surcharge to recover logistics costs as oil prices move. For third-party freight, management said Herc has built a “robust long-haul process” to broker freight at favorable price points relative to the market, though it acknowledged higher oil prices still increase costs.
About Herc NYSE: HRI
Herc Holdings Inc NYSE: HRI operates as a leading equipment rental provider in North America, offering a wide range of machinery and support services to construction, industrial, government and event sectors. The company's fleet includes aerial work platforms, earthmoving equipment, material handling solutions, power generation units and specialty tools, enabling clients to scale their operations without the capital expense of ownership. In addition to basic machinery rentals, Herc provides value-added services such as equipment maintenance, on-site safety training and project consulting to help customers optimize productivity and maintain compliance with industry standards.
Founded as part of Hertz Global Holdings, the equipment rental business was spun off as an independent public company in early 2016.
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