Herc Holdings Inc (HRI.N): Mixed 2Q & Guidance Raise Despite Inflationary Headwinds

Research evidence excerpt

Herc Holdings Inc (HRI.N): Mixed 2Q & Guidance Raise Despite Inflationary Headwinds

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28 Jul 2026 07:54:38 ET │ 12 pages

Herc Holdings Inc (HRI.N)

Mixed 2Q & Guidance Raise Despite Inflationary Headwinds

CITI'S TAKE

Buy HRI reported 2Q26 adj. EBITDA of $487mn vs Citi/FactSet Consensus of

$484mn/$488mn. Top-line results came in ~8% above our estimate, Price (27 Jul 26 16:00) US$160.00

driven by stronger-than-anticipated used equipment sales and Target price US$175.00

equipment rental sales that came in ~3% ahead of our model. Dollar Expected share price return 9.4%

utilization of 39.3% was stronger than we anticipated, up ~300-bps QoQ Expected dividend yield 1.7%

and ~220-bps y/y (pro-forma). Adj. EBITDA margin of 40.4% was ~280- Expected total return 11.1%

bps below our model. On a pro-forma basis, HRI noted that adj. EBITDA

Market Cap US$5,343M margin was down ~60-bps y/y, which includes a negative ~150-bps

impact from fuel and transportation inflation. HRI modestly raised its

2026 equipment rental revenue guidance and adj. EBITDA guidance,

which assumes fuel & transportation cost inflation persists through the Kyle MengesAC

rest of the year, and guided to a healthy step-up in capex. HRI's 2026 adj. +1-212-816-1817

EBITDA guidance of $2,088mn at the midpoint compares to kyle.menges@citi.com

Citi/Consensus estimates of $2,050mn/$2,062mn. We would anticipate

Randy Marker

a fairly muted reaction for HRI shares.

+1-212-816-3537

randy.marker@citi.com

Segment Results — Equipment rental revenue came in at $1,072mn, up ~2% y/y

pro-forma and ~3% above our estimate. Equipment rental gross margin of 31.6%

was ~220-bps below our model. Sales of rental equipment came in at $110mn,

~130% above our estimate, while segment gross margin of 21.8% was ~180-bps

above our model.