Feb. 21, 2021
Herc Rentals, Bonita Springs, Fla., plans to add another 10 to 20 new locations in 2021. This follows expansion with five greenfield stores opened in 2020 and the addition of four existing locations through the company's recent acquisition of Champion Rentals in Houston.
“We have made significant improvements in our operating efficiency over the last two years and now intend to focus on accelerating top-line growth through both the addition of new locations in major metropolitan markets and by driving utilization of more fleet through our network of branches,” Larry Silber, president, CEO and director, said in a conference call with analysts on Feb. 18 to discuss the company’s fourth quarter and full year 2020 financial results.
Herc Rentals currently operates 277 locations across the United States and Canada in 39 states and five Canadian provinces.
The company reported earning $520.4 million in total revenue during the fourth quarter compared to $540.1 million the year before. Equipment rental revenue in the fourth quarter was $427.3 million compared to $457 million in 2019. For the full year, total revenue for Herc Rentals was $1.78 billion, down 10.9 percent compared to $2 billion in 2019, and equipment rental revenue was $1.54 billion in 2020, down 9.3 percent compared to $1.7 billion in 2019. The company said the decline was primarily due to lower volume related to the impact of the coronavirus (COVID-19) pandemic.
“Our full year 2020 results ended up exceeding our COVID-revised expectations as we maintained positive pricing despite a decline in volume related to the COVID-19 business slowdown,” Silber said.
“We overcame the challenge of the prospect for lower demand by responding quickly, while continuing to deliver outstanding cost savings and efficiencies despite the extra diligence and cost of implementing new safety precautions relating to disinfecting equipment, social distancing and wearing protective personnel equipment,” he said.
As a result, Silber expects the company to outperform the industry’s forecasted average revenue growth, currently estimated by the American Rental Association (ARA) to be around 1.5 percent in 2021.
“Our specialty equipment rental business continued to expand in 2020 as we proactively assisted customers in response to the pandemic and weather-related events this year. ProSolutions revenue increased by 22 percent in the fourth quarter when industry rental revenues declines were the norm,” Silber said.
“Our strategic customer and fleet diversification helped to offset the COVID-19 slowdown we experienced in certain parts of the business with the stability of our national accounts business helping to offset the declines in local customer revenue. Our customer-centric culture and high priority for safety also provides a strong foundation as we serve our customers and keep our team and communities safe,” he said.
The company also reported that its annual total recordable incident rate declined to 0.86 in 2020, a ratio that has been declining over the last several years as the company has increased its focus on employee and customer safety.
Aaron Birnbaum, senior vice president and chief operating officer, said during the conference call that one of the major internal safety programs at Herc Rentals focuses on perfect days with no Occupational Safety and Health Administration (OSHA) recordable incidents, no at-fault motor vehicle accidents and no Department of Transportation (DOT) violations.
“In 2020, on a branch-by-branch measurement, our branch operations reported 98 percent of days as perfect. A commitment to safety means continuous focus through communications and training. And in 2020, we conducted over 58,000 hours of safety training,” Birnbaum said.
“New employees go through a rigorous safety program when they are hired, and we require annual safety training of all of our employees, including those in office settings, such as our field support center and call centers,” he said.
Herc Rentals executives also touted the company’s performance when it comes to rental rates. Mark Irons, senior vice president and chief financial officer, cited the positive momentum coming into 2020 before the pandemic in helping Herc Rentals record positive rental rates for the full year, up 10 basis points over 2019.
“All in all, excellent rate results that far exceed any previous downturn reflect on the professionalism of our sales team, the improved tools we now have at our fingertips and the continued maturity of the rental industry,” Irons said. “The industry, in general, has been more disciplined on price in the current cycle than previous downturns, and the Herc team is determined to maintain rate discipline in 2021.”
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