Herc Rentals hits highs, but impacted by actors strike
25 July 2023
The strike by film and TV actors in the US has impacted Herc Rentals’ second quarter results, with entertainment-related activity “almost halted” and revenues in that sector down 55% to US$14.0 million from the $30.2 million reported for the same quarter last year.
Despite that, strength in the company’s core construction and industrial markets drove Q2 rental revenues up 18% to $702 million, with total sales up by a quarter to $802 million. EBITDA profits were 24% higher at $352 million.
The company said in its Q2 earning release that the closure of film and TV production because of strike action by actors has cut its entertainment and TV revenues to 2% of total rental sales from 5% in the same period of 2022.
The company is now repositioning some of its entertainment fleet in anticipation of the expected duration of shutdowns.
Herc reported that in its main markets, demand for equipment has resulted in a 7.8% average increase in its rental prices year-on-year, with non-residential and industrial markets described as “healthy and growing.” The company has acquired six companies in the first half of 2023, at a cost of $271 million.
Larry Silber, HERC president and chief executive officer, said the company was generating strong growth as a result of “sound strategies…[and] a customer-first mindset.”
He added; “In the second quarter, Team Herc increased equipment rental revenue by 16% on 7.8% higher pricing, despite continued supply chain inefficiencies and labour disruptions in the film and television industry, which has all but halted our studio entertainment business.
“Growth in national account revenue and local market expansion through acquisitions and greenfield locations drove rental revenue higher, while strong returns on fleet sales represented an incremental benefit to total revenue.”
Silber said non-residential and industrial markets were healthy and growing, “with outsized opportunities coming from federally funded, large-scale infrastructure and mega projects.” He said Herc would achieve above-market growth in 2023 and over the long term.
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