What is Growth Strategy and Future Prospects of Herc Rentals Company?

The company's expansion plans are heavily weighted towards strategic mergers and acquisitions. A pivotal move was the completion of the H&E Equipment Services acquisition in June 2025, integrating over 160 branches and strengthening its position in key rental regions. This acquisition is a cornerstone of Herc Rentals' strategy to achieve market-leading growth through geographic and customer diversification.

Complementing its M&A activity, Herc Rentals actively pursues greenfield branch openings. This strategy focuses on building density in crucial metropolitan areas, supporting its urban market growth objectives. In 2024, the company opened 23 greenfield branches, with an additional 11 new locations in the first half of 2025, including three in the first quarter.

These expansion efforts are directly linked to capitalizing on robust demand from significant 'mega projects,' such as data centers, manufacturing onshoring, and LNG facilities. By expanding its network and diversifying its customer base, Herc Rentals aims to capture opportunities within these high-growth sectors.

To support the demands of these mega projects and foster cross-selling, Herc Rentals strategically enhances its specialty equipment lineup. By the close of 2024, specialty equipment represented 23% of its total fleet, indicating a focused effort to expand into new end markets and cater to evolving industry needs.

In 2024, Herc Rentals achieved a record total revenue of $3.57 billion, an increase of 9% year-over-year. Equipment rental revenue saw a significant rise of 11%, reaching $3.199 billion. The company also reported a record adjusted EBITDA of $1.583 billion, up 9%, and generated $314 million in free cash flow.

For 2025, Herc Holdings projects equipment rental revenue growth between 4% and 6%, with adjusted EBITDA expected to be between $1.575 billion and $1.650 billion. The first quarter of 2025 saw total revenues rise 7.1% to $861 million, though a net loss was reported due to acquisition costs. Second quarter 2025 results showed a strong rebound with total revenues up 18.2% to $1.002 billion and adjusted EBITDA increasing 13% to $406 million.

Herc Rentals plans to invest between $700 million and $900 million in gross fleet expenditures for 2025. This represents a decrease from the $1.048 billion invested in 2024, indicating a more focused approach on specialty equipment. Net rental equipment capital expenditures are anticipated to be between $400 million and $600 million.

The company concluded 2024 with a net debt of $4.0 billion and a net leverage ratio of 2.5x, targeting a range of 2-3 times by 2027. This financial strategy is supported by the American Rental Association's forecast of a 5.7% growth for the equipment rental market in 2025, projecting it to reach nearly $82.6 billion.

The company employs a diversified business model and asset optimization strategies to navigate industry cyclicality and competitive pressures.

Capturing a significant portion of mega project opportunities is a core element of the company's strategy to offset broader market economic impacts.

Agile fleet management practices are utilized to enhance operational efficiency and respond effectively to changing market demands, supporting the Herc Rentals growth strategy.

While the recent acquisition presents integration challenges, it is a key part of the company's expansion plans, aiming to bolster its market position and service offerings.