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Jun 30, 2020
Herc Holdings Q2 2020 Earnings Report
Herc Holdings' financial performance declined due to the impact of COVID-19, but cost control measures led to improved adjusted EBITDA margin.
Key Takeaways
Herc Holdings reported a decrease in equipment rental revenue and total revenues for Q2 2020 compared to the previous year, primarily due to the impact of COVID-19. However, the company improved its adjusted EBITDA margin through cost control initiatives.
Equipment rental revenue declined by 19.6% to $327.6 million due to lower volume.
Total revenues decreased to $368.0 million, driven by lower equipment rental and sales revenue.
Adjusted EBITDA margin improved by 380 basis points to 40.6% due to cost control measures.
The company issues 2020 adjusted EBITDA guidance of $625 million to $650 million
Herc Holdings
Herc Holdings
Herc Holdings Revenue by Segment
Revenue by Segment
Equipment Rental Revenue
CapyFin.comSales of Rental Equip. Revenue
CapyFin.comNew Equip., Parts, Supplies Revenue
CapyFin.comService and Other Revenue
CapyFin.com Forward Guidance
Herc Holdings anticipates a decline in the volume of fleet on rent and equipment rental revenue in the second half of 2020, but maintains its adjusted EBITDA guidance.
Positive Outlook
- Construction and business activity began to improve in early June and continues to trend slowly upward.
- The company has managed its costs and taken steps to substantially reduce its capital expenditures to conserve capital.
- Herc Holdings generated free cash flow of approximately $179 million in the first half of 2020.
- As of June 30, 2020, the company had ample liquidity of $1.2 billion.
- The company leadership team's experience contributed to better than anticipated second quarter operating results
Challenges Ahead
- Future business conditions related to COVID-19 are uncertain.
- The company estimates the volume of fleet on rent in the second half is likely to decline approximately 8% to 13% year-over-year.
- The company estimates equipment rental revenue in the second half will be down about 10% to 15% year-over-year.
- Lower base going into the balance of the year
- The typical seasonal ramp is starting from a lower base going into the balance of the year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income