HERC sees 2014 revenues drop

25 February 2015

Hertz Equipment Rental Corporation (HERC) reported revenues of US$433 million (€381 million) for the 12 month to 31 December last year, down 23% compared to 2013.

However, there was an uptick in the fourth quarter, when revenues increased to US$92 million (€81 million) from US$52 million (€46 million) for the same three months in 2013.

Parent company Hertz said HERC’s figures had been impacted in part by a lower level of new equipment and parts sales. But it said equipment rental pricing was 1% higher than in the 2013 fourth quarter, while time utilisation was 67% for the quarter, up 100 basis points year-on- year.

For the full-year, HERC said 25% of its total North America equipment rental revenues came from the oil and gas sector.

HERC president and CEO Brian MacDonald said, “In the second half of 2014, we established business priorities that focused on rightsizing the fleet and increasing the top line by improving sales capacity.

“By year end, US revenue growth had rebounded, trending slightly above industry levels, and outpaced fleet growth. Unfortunately, at the same time weakening demand in Canada and Europe persisted.

“While we see risk to oil and gas this year, we are managing through the volatility and are moderating our revenue growth forecasts accordingly.

"We are aggressively working to offset weakness by improving productivity, redeploying equipment, and pursuing growth in the non-residential construction and manufacturing sectors, where low fuel prices are generating opportunities. Other industrial verticals such as power and chemical processing are also areas for growth.”

HERC sale

Parent Hertz also updated the market on its plans to sell HERC as an independent business. It said it remained committed to the separation of its equipment rental business and was continuing to advance those plans, although it made clear the timing of the actual separation would not occur until after the group had completed its accounting review.

The company announced in November last year that it had discovered accounting errors in its financial reporting. In its latest financial statement, it said the impact on pre-tax income of cumulative errors identified to date was approximately US$28 million (€24 million), US$74 million (€65 million) and US$51 million (€45 million) for 2013, 2012 and 2011.

Hertz said the review and investigation of its financial records was ongoing, and numbers were therefore subject to change – including its latest fourth quarter and full-year 2014 figures.

“In addition, Hertz continues to expect that it will not be able to file updated financial statements before mid-2015, and there can be no assurance that the process will be completed at that time, or that no additional adjustments will be identified,” the company added.

Hertz’s new CEO, John Tague, who took the reins at the end of last year, said the company was working to “remediate the execution and system issues that are impeding the current operating performance”.

He added, “We are aggressively addressing areas of inefficiency and waste within the organisation.”

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