Herc (HRI) | Credit Investor

Next 12 Months: Starting Case

$ in millions	Last 12 Months	Next Quarter (4Q26E)	vs. 4Q25A	Next 12 Months	Change
Revenue	$4,916	$1,376	13.8%	$5,196	5.7%
Adj. EBITDA	$680	$252	60.7%	$780	14.6%
Free Cash Flow	$1,125	$82	(71.0%)	$105	(90.7%)
Net Debt, end of period	$7,965	$7,884		$7,860	(1.3%)
Net Debt / Adj. EBITDA	11.7x	10.2x		10.1x	-1.6x
Total Liquidity, end of period	$2,100	$2,182		$2,205	5.0%

The credit over the next year

Herc is a 3.9x levered equipment rental credit with $8.0 billion of net debt, and the next year turns on whether the Q3 2026 jump in dollar utilization to 43.5% holds as mega projects and H&E revenue synergies ramp on a fleet that grew less than 2%. The offset is diesel: retail diesel averaged about $5.57 a gallon in Q3 2026, up $1.81 from a year earlier, which pushed direct operating costs to 42.4% of rental revenue and cut free cash flow guidance to $250 to $350 million. Each point of dollar utilization is worth about $25 million of quarterly rental revenue at a high drop through, so holding utilization near 40% while diesel eases toward $5 in 2027 would let EBITDA growth bring leverage down from 3.9x, while a construction slowdown or $6 diesel would stall it.

Leverage falls from 11.7x to 10.1x over the next four quarters on the starting case.
Free cash flow of $105mm is projected over the next year, short of the $550mm of debt due in that time.
Net debt is roughly unchanged from $7.97bn to $7.86bn; maturing debt is assumed refinanced unless changed in the model.
Liquidity a year out is $2.21bn, against $2.10bn today.
Company guidance for fiscal 2026: adjusted EBITDA of $2.10bn to $2.15bn on its own definition.

Due inside a year: AR Facility (receivables securitization) ($550mm).

Built from the inputs on the Projections tab of the model; change them there. A starting case from history, not a forecast.

Capital Structure

Cap Structure	Amt Out.	Mkt Price	Yield	Lev. Through	View
Unrestricted Cash	$66.0
AR Facility (receivables securitization)	550.0	100.0%	N/a	0.8x	Bullish
ABL Credit Facility	1,950.0	100.0%	N/a	3.7x	Bullish
Term Loan Facility due 2032	744.0	100.0%	N/a	4.8x	Bullish
Finance lease liabilities	86.0	100.0%	N/a	4.9x	Bullish
6.625% Senior Notes due 2029	800.0	101.9%*	5.80%	6.1x	Neutral
7.000% Senior Notes due 2030	1,650.0	103.4%*	5.90%	8.5x	Neutral
5.750% Senior Notes due 2031	600.0	99.7%*	5.83%	9.4x	Neutral
7.250% Senior Notes due 2033	1,100.0	103.4%*	6.61%	11.0x	Neutral
6.000% Senior Notes due 2034	600.0	98.6%*	6.24%	11.9x	Neutral
Total Debt	$8,031.0			11.8x
Net Debt	$7,965.0			11.7x

Last Twelve Months

Revenue	$4,916
Implied Costs	(4,236)
Adj. EBITDA	$680
(-) Interest Expense	(530)
(-) Capex	(141)
Memo: FCF	$1,125
Total Liquidity	$2,100.0

Next 12 months, starting case▲ Revenue $4.92bn → $5.20bn▲ Adj. EBITDA $680mm → $780mm▼ Free cash flow $1.13bn → $105mm▼ Net leverage 11.7x → 10.1x▲ Liquidity $2.10bn → $2.21bn

Herc

			9/30/26						Face Value / Adj. EBITDA
Cap Structure	Coupon	Maturity	Amt Out.	Mkt Price	YTM	Next Call	Yield to Call	View	2021A	2022A	2023A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Unrestricted Cash			$66.0
Undrawn Revolver ($4,000mm facility)			2,034.0
Total Liquidity			$2,100.0

AR Facility (receivables securitization)	floating; 4.49% ...	8/31/2027	550.0	100.0%	N/a	N/a	N/a	Bullish
ABL Credit Facility	Term SOFR (or Te...	6/2/2030	1,950.0	100.0%	N/a	N/a	N/a	Bullish
Term Loan Facility due 2032	S + 175	6/2/2032	744.0	100.0%	N/a	N/a	N/a	Bullish
Finance lease liabilities	N/a	N/a	86.0	100.0%	N/a	N/a	N/a	Bullish
Total Secured Debt			$3,330.0						8.3x	5.7x	4.8x	5.9x	7.4x	4.9x	4.3x	4.1x
Net Secured Debt			$3,264.0						8.2x	5.6x	4.7x	5.7x	7.2x	4.8x	4.2x	4.0x

6.625% Senior Notes due 2029	6.625%	6/15/2029	800.0	101.9%*	5.80%	6/15/2027 @ 101.656	6.05%	Neutral
7.000% Senior Notes due 2030	7.00%	6/15/2030	1,650.0	103.4%*	5.90%	6/15/2027 @ 103.5	6.91%	Neutral
5.750% Senior Notes due 2031	5.75%	3/15/2031	600.0	99.7%*	5.83%	3/15/2028 @ 102.875	7.81%	Neutral
7.250% Senior Notes due 2033	7.25%	6/15/2033	1,100.0	103.4%*	6.61%	6/15/2028 @ 103.625	7.19%	Neutral
6.000% Senior Notes due 2034	6.00%	3/15/2034	600.0	98.6%*	6.24%	3/15/2029 @ 103	7.75%	Neutral
Other debt, discounts and issuance costs	N/a	N/a	(49.0)
Total Debt			$8,031.0						20.1x	13.8x	11.7x	14.1x	17.8x	11.8x	10.3x	9.8x
Net Debt			$7,965.0						19.9x	13.7x	11.6x	14.0x	17.7x	11.7x	10.1x	9.4x
						Adj. EBITDA			$400	$583	$689	$568	$451	$680	$780	$820

Key Financials

	2021A	2022A	2023A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Revenue	$2,073	$2,740	$3,282	$3,568	$4,376	$4,916	$5,196	$5,196
Y/Y Growth		32.2%	19.8%	8.7%	22.6%		5.7%	0.0%
Implied Costs	(1,673)	(2,157)	(2,593)	(3,000)	(3,925)	(4,236)	(4,416)	(4,376)
Adj. EBITDA	$400	$583	$689	$568	$451	$680	$780	$820
Margin	19.3%	21.3%	21.0%	15.9%	10.3%	13.8%	15.0%	15.8%
(-) Restructuring and other cash add-backs	--	--	--	--	--	--	--	--
Cash EBITDA	$400	$583	$689	$568	$451	$680	$780	$820
(-) Interest Expense (Cash Only)	(83)	(114)	(221)	(258)	(419)	(530)	(509)	(509)
(-) Cash Taxes	(23)	(22)	(30)	(12)	(24)	(16)	(16)	(16)
(-) Capex	(47)	(104)	(156)	(161)	(157)	(141)	(149)	(149)
(+/-) Working Capital and Other	449	470	648	927	1,077	1,132	--	--
Memo: FCF	$696	$813	$930	$1,064	$928	$1,125	$105	$146
% of Debt	8.7%	10.1%	11.6%	13.2%	11.6%	14.0%	1.3%	1.8%

Liquidity

Unrestricted Cash	$66.0
Undrawn Revolver	2,034.0
Total Liquidity	$2,100.0
(-) Debt due through 2028	(550.0)
(+/-) Free cash flow, last twelve months	1,125.0
Liquidity after maturities and a year of cash flow	$2,675.0

Tranches are from the debt table in the latest quarterly or annual report.Blue figures are inputs in the model. Price is 100% of face unless marked *, which is a bond fund's own valuation from its SEC holdings report, not a traded price.Secured and unsecured are judged from each instrument's name. Adj. EBITDA is operating income plus D&A, stock compensation, restructuring and impairment charges as tagged in SEC filings; it is not the company's own adjusted figure. Free cash flow is cash from operations less capital spending.

The basket review for this company has not finished yet. When it does, this tab shows the dollar capacity to move value or prime lenders, the playbook moves that fit, and what they would do to each tranche. Meanwhile, see the liability management playbook.

Key Financials

	2021A	2022A	2023A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Revenue	$2,073	$2,740	$3,282	$3,568	$4,376	$4,916	$5,196	$5,196
Y/Y Growth		32.2%	19.8%	8.7%	22.6%		5.7%	0.0%
Implied Costs	(1,673)	(2,157)	(2,593)	(3,000)	(3,925)	(4,236)	(4,416)	(4,376)
Adj. EBITDA	$400	$583	$689	$568	$451	$680	$780	$820
Margin	19.3%	21.3%	21.0%	15.9%	10.3%	13.8%	15.0%	15.8%
(-) Restructuring and other cash add-backs	--	--	--	--	--	--	--	--
Cash EBITDA	$400	$583	$689	$568	$451	$680	$780	$820
(-) Interest Expense (Cash Only)	(83)	(114)	(221)	(258)	(419)	(530)	(509)	(509)
(-) Cash Taxes	(23)	(22)	(30)	(12)	(24)	(16)	(16)	(16)
(-) Capex	(47)	(104)	(156)	(161)	(157)	(141)	(149)	(149)
(+/-) Working Capital and Other	449	470	648	927	1,077	1,132	--	--
Memo: FCF	$696	$813	$930	$1,064	$928	$1,125	$105	$146
% of Debt	8.7%	10.1%	11.6%	13.2%	11.6%	14.0%	1.3%	1.8%

Key Drivers

Driver	4Q25A	1Q26A	2Q26A	3Q26A	4Q26E	1Q27E	2Q27E	3Q27E	4Q27E	1Q28E	2Q28E	3Q28E	Sensitivity	Next 12m impact ($mm)
Rental fleet size at original equipment cost $ billions of OEC, end of quarter	9.5	9.4	9.6	10.0	10.0	10.0	10.0	10.0	10.0	10.0	10.0	10.0	$113.0mm on revenue	170
Dollar utilization % (annualized rental revenue excluding ancillary divided by average fleet OEC)	37.5	36.4	39.3	43.5	42.0	36.4	39.3	43.5	42.0	36.4	39.3	43.5	$24.5mm on revenue	110
US retail diesel price $ per gallon, quarterly average of EIA monthly No. 2 diesel retail price	3.71	4.06	5.38	5.57	6.00	5.70	5.15	4.85	4.42	4.40	4.40	4.40	$10.0mm on cost of revenue	30
Direct operating expense ratio % of equipment rental revenue	41.3	46.2	45.8	42.4	41.3	46.2	45.8	42.4	41.3	46.2	45.8	42.4	$10.9mm on cost of revenue	--
Used equipment recovery rate % of OEC realized on fleet disposals	45	49	46	42	45	49	46	42	45	49	46	42	$2.4mm on revenue	--

Herc is a 3.9x levered equipment rental credit with $8.0 billion of net debt, and the next year turns on whether the Q3 2026 jump in dollar utilization to 43.5% holds as mega projects and H&E revenue synergies ramp on a fleet that grew less than 2%. The offset is diesel: retail diesel averaged about $5.57 a gallon in Q3 2026, up $1.81 from a year earlier, which pushed direct operating costs to 42.4% of rental revenue and cut free cash flow guidance to $250 to $350 million. Each point of dollar utilization is worth about $25 million of quarterly rental revenue at a high drop through, so holding utilization near 40% while diesel eases toward $5 in 2027 would let EBITDA growth bring leverage down from 3.9x, while a construction slowdown or $6 diesel would stall it.

Bottoms-Up Projections: starting case

$ in millions	4Q25A	1Q26A	2Q26A	3Q26A	4Q26E	1Q27E	2Q27E	3Q27E	4Q27E	1Q28E	2Q28E	3Q28E
Revenue	$1,209	$1,139	$1,204	$1,364	$1,376	$1,207	$1,249	$1,364	$1,376	$1,207	$1,249	$1,364
Y/Y Growth	27.1%	32.3%	20.2%	4.6%	13.8%	6.0%	3.8%	0.0%	0.0%	0.0%	0.0%	0.0%
Adj. EBITDA	$157	$111	$152	$260	$252	$102	$165	$260	$268	$115	$173	$265
Margin	13.0%	9.7%	12.6%	19.1%	18.3%	8.4%	13.2%	19.1%	19.5%	9.5%	13.8%	19.4%
Free Cash Flow	$281	$236	$273	$335	$82	($64)	($2)	$90	$97	($51)	$5	$94
Cash, end of period	52	43	43	66	148	83	81	171	268	217	223	317
Total Debt, end of period	8,047	7,985	7,912	8,031	8,031	8,031	8,031	8,031	8,031	8,031	8,031	8,031
Net Debt / Adj. EBITDA	16.0x	14.4x	12.9x	11.7x	10.2x	10.4x	10.2x	10.1x	9.8x	9.7x	9.6x	9.4x

Revenue is built from one revenue line, each driven by volume and by price and mix against the same quarter a year earlier. Every cost line, interest, taxes, capital spending and working capital has its own input on the Projections tab of the model. This is a starting case built from history, not a forecast.

Earnings call: Q3 2026 · Oct 27, 2026

Slides Webcast and audio replay Investor relations site

Record rental revenue up 12% on a flat fleet, margin up 190 bps, and full-year guidance raised for the second time in 2026.

Takeaways

Equipment rental revenue rose 12% to $1,254 million while average fleet grew under 2%. Dollar utilization improved to 43.5% from 39.9%, helped by mega projects, specialty growth and H&E revenue synergies.
Total revenue grew 5% to $1,364 million because used equipment sales fell $66 million from an elevated post-acquisition level. Adjusted EBITDA rose 9% to a record $603 million and margin widened to 44.2% from 42.3%.
Cost pressure is visible. Direct operating costs rose to 42.4% of rental revenue from 41.6% on higher delivery, fuel and incentive pay, so rental EBITDA (REBITDA) margin slipped 70 bps to 45.2%.
Nine-month operating cash flow was $951 million, up from $770 million. Free cash flow was $133 million after $737 million of net rental capex, below the $202 million reported at the half year as fleet spending stepped up.
Net debt was $8.0 billion and net leverage was 3.90x, edging down from 3.95x in June but still well above pre-acquisition levels. Liquidity was about $2.1 billion from cash and unused ABL and AR facility capacity.
Interest expense fell to $126 million from $134 million on lower borrowings and floating rates. Ratings were held at Ba2 (Moody's) and BB (S&P).

Debt and capital

Net debt of $8.0 billion and net leverage of 3.90x on pro forma trailing adjusted EBITDA, versus $8.2 billion and 3.84x a year earlier.
Maturity ladder shows no unsecured notes due until 2029. Debt includes 2029, 2030, 2031, 2033 and 2034 senior unsecured notes, a term loan, the ABL facility, the AR facility and about $86 million of finance leases.
The AR securitization facility was amended on August 31, 2026 to add commitments and extend maturity to August 31, 2027. It is shown outside current maturities because the company intends to refinance it.
Liquidity of about $2.1 billion. Credit ratings maintained at Ba2 CFR (Moody's) and BB (S&P).
Quarterly dividend held at $0.70 per share. No buyback activity was disclosed.

Guidance

Full-year 2026 guidance was raised for the second time this year.
Equipment rental revenue raised to $4.475 to $4.550 billion, from $4.375 to $4.475 billion.
Adjusted EBITDA raised to $2.10 to $2.15 billion, from $2.05 to $2.125 billion.
Net rental capex raised to $1.0 to $1.1 billion, from $850 to $950 million. Gross capex raised to $1.45 to $1.60 billion, from $1.25 to $1.40 billion.
Free cash flow range held at $250 to $350 million, on an adjusted basis that excludes extra strategic fleet investment.
Assumptions: incremental revenue synergies of $100 to $120 million, incremental cost synergies of $90 million toward a $125 million run rate by year end, fleet disposals of about $950 million to $1 billion at OEC, and fuel inflation persisting.

Tone: Confident and growth focused, with management pointing to an expanding large-project pipeline while flagging fuel and delivery cost headwinds.

Q2 2026Slides · Webcast
Q1 2026Slides · Webcast
Q4 2025Slides · Webcast

Summary written with AI from Press release and earnings presentation only. The company does not publish a transcript or prepared remarks on its IR site or with the SEC. The webcast replay is archived on the IR site for 12 months.. Slides, audio and any transcript are the company's and open on its own site. Full transcripts from transcript vendors are not reproduced here.

Last quarter: Third quarter 2026

Herc grew rental revenue 12% and adjusted EBITDA 9% on mega-project demand, and raised 2026 guidance for the second time.

Results

Total revenue was $1,364mm, up 5% from $1,304mm, as equipment rental revenue rose 12% to $1,254mm while used equipment sales fell $66mm.
Adjusted EBITDA was $603mm, up 9% from $551mm, with margin of 44.2% versus 42.3% a year earlier.
Net income was $104mm versus $30mm a year earlier, helped by transaction costs falling to $1mm from $38mm.
Free cash flow for the first nine months was $133mm, the same as a year earlier, after net rental capex of $737mm versus $529mm.
Dollar utilization rose to 43.5% from 39.9% on an average fleet that grew 1.7% at original cost.

Why

Volume on mega projects and growth in the specialty business drove rental revenue, with revenue synergies from the H&E acquisition adding more in the second half.
Direct operating costs rose to 42.4% of rental revenue from 41.6%, mainly on higher transport and fuel costs and field incentive pay.
SG&A fell to 14.2% of rental revenue from 14.8% as acquisition cost synergies came through.
Interest expense fell to $126mm from $134mm on lower average borrowings and lower floating rates.

Balance sheet and guidance

Net debt was $8.0bn at September 30, 2026, with reported net leverage of 3.90x, down from 3.95x at June 30 but above 3.84x a year earlier.
Liquidity was about $2.1bn from cash of $66mm and unused ABL commitments.
Receivables rose to $929mm from $769mm at year end, a $260mm use of cash in the first nine months.
Full-year 2026 equipment rental revenue guidance raised to $4.475bn to $4.55bn from $4.375bn to $4.475bn.
Adjusted EBITDA guidance raised to $2.10bn to $2.15bn from $2.05bn to $2.125bn.
Net rental capex guidance raised to $1.0bn to $1.1bn from $850mm to $950mm, and gross capex to $1.45bn to $1.60bn from $1.25bn to $1.40bn.
The release gives no free cash flow guidance; the earnings presentation keeps a 2026 free cash flow range of $250mm to $350mm, on a basis it says is adjusted for added fleet investment without defining the adjustment.

What to watch

Higher capex guidance against nine-month free cash flow of only $133mm: whether the fourth quarter brings enough cash to reduce net debt from $8.0bn.
Net leverage of 3.90x has barely moved from 3.96x in March; watch whether EBITDA growth brings it down in the fourth quarter.
Receivables grew $160mm since year end and transport and fuel costs are rising; watch working capital and direct cost ratios.

From the company's press release filed Oct 27, 2026. Figures in this section are as the company reports them, including its own adjusted EBITDA.

Filings

Earnings releases 8

Oct 27, 20268-K for Oct 27, 2026: Results · Presentation or supplement · Presentation or supplement
Jul 28, 20268-K for Jul 28, 2026: Results · Presentation or supplement · Presentation or supplement
Apr 28, 20268-K for Apr 28, 2026: Results · Presentation or supplement · Presentation or supplement
Feb 17, 20268-K for Feb 17, 2026: Results · Presentation or supplement · Presentation or supplement
Oct 28, 20258-K for Oct 28, 2025: Results · Presentation or supplement · Presentation or supplement
Jul 29, 20258-K for Jul 29, 2025: Results · Presentation or supplement · Presentation or supplement
Apr 22, 20258-K for Apr 22, 2025: Results · Presentation or supplement · Presentation or supplement
Feb 13, 20258-K for Feb 13, 2025: Results · Presentation or supplement · Presentation or supplement

Annual reports (10-K) 5

Quarterly reports (10-Q) 12

Current reports (8-K) 20

Oct 26, 20268-K for Oct 23, 2026: Director or officer change
Sep 3, 20268-K for Aug 31, 2026: Material agreement
Aug 19, 20268-K for Aug 19, 2026: Director or officer change
May 20, 20268-K for May 14, 2026: Shareholder vote
Jan 30, 20268-K for Jan 28, 2026: Director or officer change
Dec 16, 20258-K for Dec 16, 2025: Material agreement; Agreement terminated; New debt
Dec 3, 20258-K for Dec 2, 2025: Other event
Dec 2, 20258-K for Dec 2, 2025: Other event
Dec 1, 20258-K for Dec 1, 2025: Other event
Nov 24, 20258-K for Nov 24, 2025: Director or officer change
Sep 4, 20258-K for Aug 29, 2025: Material agreement
Aug 5, 20258-K for Aug 5, 2025: Other event
Jun 2, 20258-K for Jun 2, 2025: Material agreement; Agreement terminated; Acquisition or disposal completed; New debt; Director or officer change; Regulation FD
May 20, 20258-K for May 15, 2025: Shareholder vote
May 16, 20258-K for May 16, 2025: Director or officer change
May 16, 20258-K for May 15, 2025: Other event
May 12, 20258-K for May 12, 2025: Regulation FD
Mar 19, 20258-K for Mar 19, 2025: Other event
Mar 12, 20258-K for Mar 11, 2025: Material agreement
Feb 20, 20258-K for Feb 19, 2025: Material agreement; Other event

Proxy statements 3

Other filings 8

May 19, 2025424B3
May 8, 2025S-4/A
Apr 18, 2025S-4/A
Mar 19, 2025S-4
Mar 4, 201610-K/A for Dec 31, 2015
Nov 9, 201510-Q/A for Jun 30, 2015
Feb 27, 201515-12B
Feb 4, 201525-NSE

Links open the document on SEC EDGAR. Earnings call transcripts are not SEC filings and belong to their publishers, so they are not reproduced here; the press release and slides filed with each results 8-K are.

Rating actions

Mar 1, 2025Moody's: Ba2 corporate family rating maintained. The company reports Moody's kept its corporate rating unchanged after reviewing the debt-funded H&E Equipment Services acquisition. · source
Mar 1, 2025S&P: BB issuer credit rating maintained. The company reports S&P kept its corporate rating unchanged after reviewing the debt-funded H&E Equipment Services acquisition. · source

Coming up

Feb 16, 2027Results. Full-year results for the period ending 2026-12-31. The date is an estimate: last year's filing date moved forward a year.
Aug 31, 2027Maturity. AR Facility (receivables securitization): $550mm outstanding comes due.

Recent 8-K filings

Oct 27, 2026Reported results
Oct 26, 2026Director or officer change
Sep 3, 2026Entered into a material agreement
Aug 19, 2026Director or officer change
Jul 28, 2026Reported results