Herc raises 2026 rental revenue outlook to $4.475–$4.550 billion
Key Facts
Herc Holdings raised its 2026 outlook for equipment rental revenue and adjusted EBITDA after posting rental revenue growth in the third quarter alongside a limited increase in average fleet size. The company said in its earnings release that its expected rental revenue range is now $4.475–$4.550 billion, compared with previous guidance of $4.375–$4.475 billion. It also raised its adjusted EBITDA range to $2.10–$2.15 billion from $2.05–$2.125 billion. Herc said this was the second time this year it had raised its revenue, earnings and capital spending guidance. EL7 closing data showed the stock ended the October 29 session at $173.95.
Total revenue was $1.364 billion in the third quarter, up 5% from $1.304 billion a year earlier. The company said lower sales of rental equipment limited the overall increase, despite a 12% rise in equipment rental revenue. Chief Executive Larry Silber said rental revenue growth, alongside the limited increase in average fleet size, lifted dollar utilization by 360 basis points. He said in the release: "Equipment rental revenue increased 12% with average fleet growth of less than 2%, driving a 360-basis-point improvement in dollar utilization."
Dollar fleet utilization rose to 43.5% in the third quarter from 39.9% in the same period a year earlier. The company attributed the improvement to higher fleet operating efficiency and a shift in the mix toward higher-yielding, rented equipment. The development puts the revenue increase alongside better utilization of existing equipment, while average fleet growth did not exceed 2%. But direct operating costs rose to $532 million, equal to 42.4% of rental revenue, from $467 million, or 41.6%, a year earlier. Herc linked the relatively higher expenses to transportation and fuel costs and performance-based incentives.
The company also raised its 2026 net capital expenditure range for rental equipment to $1.0–$1.1 billion from a previous range of $850–$950 million. It said growth in its large-project pipeline exceeded expectations, with expanding opportunities in data centers, infrastructure, manufacturing facilities and energy projects. Herc said these opportunities prompted it to raise its revenue, earnings and capital spending guidance for the second time this year. The higher planned spending reflects the company’s expectation of greater equipment needs to keep pace with demand, alongside the improvement in utilization recorded in the third quarter. The revised guidance shows management expects higher rental revenue and earnings, while allocating more capital to expand its rental equipment fleet.
Company data showed net debt of $8.0 billion on September 30, 2026, while net leverage reached 3.90 times. These figures come alongside a higher capital spending plan and an increase in direct operating expenses as a share of rental revenue. The Motley Fool reported on October 27 that the stock had risen 23.4% in trading through 2:21 p.m. Eastern time, linking the move to strong results and higher guidance. In a separate report published on October 27, Investing.com said the stock had risen 5.4% in premarket trading following the earnings announcement.