HRI Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Equipment Rental Revenue: Increased by approximately 23% year-over-year, driven by the H&E acquisition.

Total Revenues: Grew by 20%.

Adjusted EBITDA: Increased by 19%, with a margin of 40.4%.

Adjusted Net Income: Reported at $48 million or $1.43 per diluted share.

Pro Forma Performance: Equipment rental revenue increased by 2% despite a reduction in average fleet size, indicating improved fleet efficiency.

Free Cash Flow: Generated $202 million in the first half of the year, with liquidity at $2.1 billion and net leverage at 3.95x.

2Strategic Updates and Business Highlights

H&E Integration: Successfully completed, allowing for a focus on execution and revenue growth.

Fleet Management: Positive fleet efficiency achieved, with a 2% increase in pro forma equipment rental revenue despite a 3% reduction in average fleet size.

Specialty Revenue Growth: Specialty revenues rose by double digits, with continued investment in specialty fleet to support mega projects.

Technology Investments: Enhanced digital capabilities through the ProControl platform, leading to a significant increase in active users.

National Accounts Growth: Strong performance driven by mega project activity, with an increased target share of the U.S. mega project opportunity from 15% to 20%.

3Forward Guidance and Outlook

Revised Full-Year Guidance:

Equipment rental revenue expected at $4.425 billion.

Adjusted EBITDA projected at approximately $2.09 billion.

Free cash flow anticipated between $250 million to $350 million.

Capital Expenditures: Increased net fleet CapEx to approximately $900 million, driven by strong demand signals, particularly in specialty equipment.

4Challenges and Points of Concern

Fuel Inflation: Significant headwinds from fuel and logistics inflation, impacting margins, particularly in April. Estimated to create about a point of pressure on adjusted EBITDA margin for the full year.

Market Dynamics: Demand remains bifurcated, with some local markets experiencing weakness due to interest rate sensitivity, while others benefit from infrastructure and mega project activities.

Integration and Pricing: H&E's pricing structure may require adjustments to align with Herc's standards, which could take time.

5Notable Q&A Insights

Pricing Environment: Management noted a rational pricing environment with healthy supply and demand dynamics. They are focused on maintaining pricing discipline.

Mega Projects Participation: The company is better positioned to bid for more significant roles in mega projects due to increased fleet capacity and capabilities post-acquisition.

Logistics Transformation: A multiyear initiative aimed at improving transportation economics and cost recovery, with ongoing investments in logistics expertise.

CapEx Decisions: Increased fleet investment is demand-driven, with a focus on capturing opportunities rather than speculative growth. Overall, HRI reported a solid quarter with significant growth driven by the H&E acquisition, while also facing challenges from inflation and market variability. The company remains optimistic about its strategic initiatives and growth potential in the second half of 2026.