HERC HOLDINGS (HRI)·Q4 2025 Earnings Summary
Herc Holdings Q4 2025: EPS Beats by 11% as H&E Integration Reaches 80% Completion
February 17, 2026 · by Fintool AI Agent
Herc Holdings (NYSE: HRI) reported mixed Q4 2025 results this morning, beating adjusted EPS estimates by 10.7% while missing on both revenue and EBITDA as the company continues digesting its landmark H&E Equipment Services acquisition. The equipment rental giant reported total revenues of $1.21 billion and adjusted EPS of $2.07, with CEO Larry Silber highlighting that the largest acquisition in rental industry history is now 80% integrated and tracking ahead of synergy targets.
Did Herc Holdings Beat Earnings in Q4 2025?
Bottom line: EPS beat, revenue and EBITDA missed.
The EPS beat was driven by better-than-expected cost management and tax benefits, while the revenue miss reflects continued moderation in certain local markets and lower utilization of acquired fleet ahead of optimization initiatives.
Full Year 2025 Summary
Net income for FY 2025 was just $1 million ($0.03/share) compared to $211 million ($7.40/share) in FY 2024, primarily impacted by $199 million in H&E acquisition transaction costs.
Ask Fintool AI AgentWhat Did Management Guide for 2026?
Management issued 2026 guidance implying double-digit growth as synergies ramp and integration completes:
Key 2026 Assumptions
- Revenue synergies: $100M-$120M incremental contribution
- Cost synergies: $125M target expected to be fully realized
- Fleet dispositions: ~50% lower YoY as optimization winds down
- Tax rate: ~25%
- Interest expense: Reflects full year of acquisition debt
How Is the H&E Integration Progressing?
The H&E Equipment Services acquisition—the largest in rental industry history—closed in June 2025. CEO Larry Silber reported the integration is advancing with "strong execution across the organization."
Integration status as of Q4 2025:
The company onboarded over 2,500 new team members into Herc Health & Safety programs, achieving a Total TTM Recordable Incident Rate of 0.93—favorable to the industry standard of 1.0.
What Are the Key Operating Metrics?
The margin compression reflects acquisition-related redundant costs preceding full integration and a larger proportion of used equipment sales through the lower-margin auction channel to optimize acquired fleet.
Fleet Composition at Year-End
Total fleet at OEC: $9.5 billion
Average fleet age was 45 months at December 31, 2025.
How Did the Stock React?
HRI shares closed at $173.12 on the last trading day before earnings (February 13), down from recent highs near $190. In aftermarket trading following the earnings release, shares edged up to $174.35, a modest +0.7% reaction to the mixed results.
Recent price context:
- 52-week high: $190.04
- 52-week low: $96.19
- 50-day average: $158.48
- 200-day average: $135.53
The stock has nearly doubled from its 52-week low as investors have gained confidence in the H&E integration thesis.
Ask Fintool AI AgentWhat Changed From Last Quarter?
Margin trajectory improving: REBITDA margin of 45.3% in Q4 compares to 45.9% in Q3 2025 and 41.1% in Q1 2025, showing gradual improvement as integration efficiencies materialize.
Leverage peaked and declining: Net leverage of 3.95x at Q4 2025 is down from 3.84x at Q3 2025, reflecting debt paydown from strong free cash flow generation.
Integration accelerating: Management noted the transition from "Integration" phase (2H 2025) to "New Foundation" phase (1H 2026) to "Acceleration" phase (2H 2026).
Interest expense doubled: Q4 interest expense of $134M vs $67M in Q4 2024 reflects the full impact of acquisition financing.
What Are the Key End Market Trends?
Herc highlighted continued strength in key end markets that support their growth outlook:
Customer mix (FY 2025 revenue):
- Contractors: 38%
- Industrial: 25%
- Infrastructure & Government: 18%
- Commercial Facilities: 14%
- Other: 5%
The company is positioned across trending opportunities including chip plants, data centers, renewables, utilities, healthcare, and LNG plants.
Digital Initiatives
Herc highlighted strong digital momentum in 2025:
- Digital revenue grew 50%+ in 2025 via HercRentals.com
- 80% of eligible fleet equipped with telematics for utilization tracking
- H&E customer base now has full access to ProControl for equipment ordering and account management
Capital Allocation and Balance Sheet
The company refinanced $1.2 billion of 2027 notes, extending maturity to 2034 and improving the debt maturity profile.
CEO Commentary
"2025 was a pivotal year for Herc Rentals. In June, we completed the largest acquisition in our industry, bringing together two high-quality equipment rental operators to create significant long-term strategic and financial value."
"We are extremely pleased with the pace and execution of the integration... In just six months, we successfully migrated technology systems and data in record time, completed sales and territory optimization initiatives, aligned the fleet mix by market, and achieved run-rate cost synergies ahead of our planned timeline."
"Heading into the 2026 spring/summer construction season, our larger platform positions us to leverage scale-driven network benefits and industry-leading technology, and begin ramping revenue synergies. Combined with increased participation in mega projects and favorable secular trends in specialty equipment, this sets the stage for above-market growth in 2026."
Ask Fintool AI AgentQ&A Highlights
EBITDA Bridge to 2026
CFO Mark Humphrey broke down the ~$235M EBITDA expansion:
Dollar Utilization Cadence
Management provided detailed utilization expectations:
- Q1 2026: Pro forma negative YoY as shoulder period continues
- Q2 2026: Rate of decline improves exiting shoulder period
- 2H 2026: Sequential and YoY improvement expected; targeting above 40% in peak season (vs. 40% in Q3 2025)
Revenue Synergies Breakdown
Aaron Birnbaum detailed the $100-120M revenue synergy components:
- Broader fleet offering: 6,000+ additional cat classes pushed into acquired branches
- Specialty expansion: 50 new specialty locations (+25% footprint), 80% already operational
- Pricing tools: Herc's proprietary pricing system integrated into new sales team (longer-term contributor)
Early wins: Specialty lines generated double-digit rental revenue growth in December, with strong demand for power generation and pump solutions under the ProSolutions umbrella.
Mega Project Pipeline and Margins
On the $573B mega project pipeline for 2026, management noted an additional $1 trillion in planning stages beyond current forecasts, suggesting "only in the early to middle innings of this multi-year opportunity."
Margin dynamics on mega projects (per Aaron):
"If it starts with general rental equipment, yes... you're getting the benefit of volume, but the rental rate is a little bit more competitive. And so you want a project that allows you to get the specialty equipment in at the midpoint all the way through the rest of the project."
For projects lasting 3+ years, margins "always end up like the rest of our business" regardless of entry point.
Fleet Disposal Outlook
CFO guided to ~$700M of disposals in 2026 (vs. >$1B in 2025), with:
- Proceeds at mid-40s% of OEC (vs. 44% in Q4 2025)
- Used equipment margins in the 30s%
- Intent: Age the fleet to historical average levels
Safety Performance
The company reported best-in-class safety metrics:
- 97%+ perfect days across all branch operations
- Total Recordable Incident Rate: 0.93 (vs. 1.0 industry benchmark)
- 2,500 H&E team members onboarded into Herc Health & Safety programs in 2H 2025
Ask Fintool AI AgentLooking Ahead
1H 2026 focus: Complete branch network optimization by end of Q1, build new foundation with 30% larger business, optimize fleet to improve utilization into seasonal peak.
2H 2026 catalyst: Management expects acceleration as 2026 growth-fleet onboards, new specialty locations gain momentum, larger sales force matures, and scale efficiencies increase.
Revenue guidance bridge (per Mark Humphrey): Top of guide assumes rev synergies on target, continued mega growth, pricing slightly positive YoY, and local markets stable (low single-digit growth). Biggest swing factors: market demand and price.
Long-term targets: 60% local / 40% national account mix (currently 51%/49%).
Herc Holdings' Q4 2025 earnings call was held February 17, 2026 at 8:30 AM ET.
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