Herc Holdings Q2 Earnings Top Estimates on Rental Growth, 2026 View Up

Adjusted EBITDA increased 18.8% year over year to $487 million. The adjusted EBITDA margin contracted 50 basis points to 40.4%, primarily due to higher fuel and transportation costs.

HRI's Rental Revenues Lead Top-Line Growth

Equipment rental revenues increased 23.2% year over year to $1.07 billion. The business benefited from the expanded fleet, stronger volume on mega projects and cross-selling opportunities created by the H&E transaction.

Sales of rental equipment rose 3.8% year over year to $110 million as Herc continued adjusting fleet mix to customer demand. Service and other revenues increased 11.1% year over year to $10 million, while sales of new equipment, parts and supplies fell 29.4% year over year to $12 million.

Herc's Fleet Efficiency Improves

Average fleet size increased 20.4% year over year, primarily reflecting the H&E acquisition. The fleet totaled approximately $9.6 billion at original equipment cost at the end of June, while its average age remained 46 months.

Dollar utilization, which measures rental revenue relative to average fleet cost, rose to 39.3% from 38.3%. Compared with the prior-year pro forma figure, utilization improved 220 basis points as fleet efficiency strengthened and the mix shifted toward higher-return equipment.

Fleet expenditures at original equipment cost totaled $451 million during the reported quarter.

Herc's Expenses Reflect the Larger Business

Direct operating expenses increased 29.6% year over year to $491 million and represented 45.8% of equipment rental revenues (up from 43.6%). The increase reflected the acquired H&E operations, newer locations that require time to mature and higher transportation and fuel costs.

Rental equipment depreciation rose 24.1% year over year to $242 million because of the larger fleet. Non-rental depreciation and amortization increased 66.7% year over year to $75 million, mainly due to acquired intangible assets and business expansion.

Selling, general and administrative expenses increased 22% year over year to $155 million, but declined slightly as a percentage of equipment rental revenues to 14.5%. Interest expense climbed 46.5% year over year to $126 million, reflecting debt issued to finance the H&E acquisition.Top of Form

HRI's Cash Flow and Liquidity Remain Solid

Herc Holdings exited the second quarter with cash and cash equivalents of $43 million, flat sequentially. Long-term debt was $7.88 billion compared with $7.95 billion at the prior-quarter end.

First-half operating cash flow increased to $591 million from $412 million. Free cash flow nearly doubled to $202 million from $103 million despite higher investment in rental equipment.

The company paid a quarterly dividend of 70 cents per share on June 12.

Herc Raises Its 2026 Outlook

Herc Holdings increased its full-year equipment rental revenue guidance to $4.38-$4.48 billion from $4.28-$4.40 billion. The company now expects adjusted EBITDA of $2.05-$2.13 billion compared with its previous range of $2-$2.1 billion.

Net rental equipment capital expenditures are projected to be between $850 million and $950 million, up from $500-$800 million. Gross capital expenditures are now expected to be between $1.25 billion and $1.4 billion (prior view: $800 million to $1.1 billion).

Management expects incremental revenue synergies of $100-$120 million and incremental cost synergies of $90 million in 2026. The company targets fully realized annual cost synergies of $125 million by year-end.

Full-year free cash flow is expected to range from $250 million to $350 million after strategic fleet investment.

Currently, Herc Holdings carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q2 Performances of Other Transportation Companies

Delta Air Lines (DAL) reported second-quarter 2026 earnings (excluding 88 cents from non-recurring items) of $1.56 per share, beating the Zacks Consensus Estimate of $1.51. Earnings declined in double digits (% wise) from a year ago as sharply higher fuel costs pressured profitability.

Revenues rose on a year-over-year basis to $17.67 billion but missed the consensus estimate of $17.76 billion. Broad demand strength lifted adjusted total revenue per available seat mile, or TRASM, 12.4%, while premium and diversified revenue streams continued to expand.

United Airlines Holdings, Inc. (UAL)reported second-quarter 2026 adjusted earnings of $1.99 per share, down 48.6% year over year but above the Zacks Consensus Estimate of $1.92 by 3.7%.

Operating revenues rose 16% to $17.67 billion and were essentially in line with the $17.68-billion consensus mark. A 12.1% increase in total revenue per available seat mile, or TRASM, and broad-based gains across premium, loyalty and cargo revenues supported the top line despite sharply higher fuel costs.

J.B. Hunt Transport Services, Inc. (JBHT) reported second-quarter 2026 earnings of $1.91 per share, up 45.8% from $1.31 a year ago. The figure beat the Zacks Consensus Estimate of $1.71 by 11.7%.

Operating revenues climbed 19.4% year over year to $3.50 billion and surpassed the consensus mark of $3.19 billion by 9.5%. Higher volumes and pricing across several businesses supported growth, led by a 10% increase in Intermodal loads.

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