USA-based Hertz Equipment Rental Corporation (HERC) said it will reduce operating costs and capital spending after a disappointing first quarter of 2015.
Year on year North American equipment rental revenues remained flat in the three months to 31 March, at $334 million (€294 million), due to the continuing weakness of the oil and gas sectors in the region. Time utilisation, at 62%, also remained flat for the period.
Worldwide equipment rental revenue was $355 million (€313 million), down by 1%.
With upstream oil and gas revenue accounting for about 15% of the company’s North American equipment rental revenues, a drop in income of 13% for the quarter left the company unable to capitalise on its success in other rental sectors. These were up 6% before currency effects were taken into consideration.
HERC president and CEO Brian MacDonald said: “The pressure from upstream oil and gas weakness came on faster than our internal forecast, impacting both revenue and profitability in the latest quarter.
“Our exposure in Northern Alberta, West Texas and Oklahoma is overshadowing the progress we have made in diversifying our top line into growth markets.
“As a result, we are reducing operating costs and capital spending to reflect our revised demand outlook.”
The first quarter financial report also reiterated the Hertz group's commitment to separating the equipment rental business, though it said this would not happen until after its financial review is completed.
The overall Hertz rental business, which includes its car hire operation, reported on the ongoing investigation into its financial records and said that it had identified a further $30 million (€26.4 million) of errors in previously reported financial results on top of those already declared.
This brings the cumulative unaudited total to $183 million (€161 million) for the period 2011 to 2013, including $28 million (€25 million) disclosed two years ago.
The updated position is that Hertz “anticipates filing” a Form 10-K for 2014. This will contain audited financial statements for 2014, audited restated statements for the previous two years, and some financial information relating to 2011.
However, the company said the earliest it would be able to file would be the middle of this year, but it could not guarantee that either the Form 10-K or this quarter’s Form 10-Q would be completed by that time, or that no further adjustments would be necessary.