Herc Rentals grew its fourth quarter rental revenues by 8% to $447.7 million for the fourth quarter of 2018 and reported an overall increase of 10.6% to $1,658.3 million for the full year.
Average fleet at original equipment cost (OEC) increased 4.4% and overall pricing improved 2.9% in the fourth quarter of 2018 over the prior-year period. Adjusted EBITDA increased 11.6% to $198.4 million in the fourth quarter compared to $177.8 million in the comparable period in 2017.
“We are pleased with the double-digit year-over-year growth in equipment rental revenue and adjusted EBITDA we achieved in 2018,” said Larry Silber, president and chief executive officer. “During the year, we raised our adjusted EBITDA guidance twice, and our 2018 results came in at the high end of the updated range we provided in November. Dollar utilization of 39.7% for the fourth quarter was the highest recorded since we became a stand-alone public company. Solid market demand supported the uplift in pricing of 2.9% in the quarter, our 11th consecutive quarter of year-over-year pricing improvement.
The company reported net income of $33.3 million or $1.16 per diluted share in the fourth quarter of 2018 compared to $214.3 million or $7.44 per diluted share in the same period in 2017. The results include net tax benefits of $6.0 million or $0.21 per diluted share in 2018, and $207.1 million or $7.19 per diluted share in 2017, related to the enactment of the Tax Cuts and Jobs Act of 2017.
“We intend to continue to drive rental revenue growth through our urban market strategy, fleet and customer diversification initiatives, and the strong market environment. We expect to enhance adjusted EBITDA margin with a steady focus on flow-through in 2019, which in turn should strengthen our free cash flow and continue to improve our balance sheet,” Silber added.
Herc reported net fleet capital expenditures of $499.1 million for 2018 and its average fleet age declined to approximately 46 months as of December 31, 2018, compared with approximately 49 months as of December 31, 2017.
“The continued robust market demand along with our improved operating efficiencies support our expectation for year-over-year growth in adjusted EBITDA of approximately 7% to 11% in fiscal 2019,” said Silber. “Our 2019 net capital spending is expected to be lower than 2018 as we continue to improve the quality and age of the fleet by disposing of non-preferred brands and older equipment. By staying focused on disciplined capital management, we intend to continue to lower our net leverage by the end of the year.”