Herc Holdings has announced new strategic initiatives to accelerate the company’s rate of growth in both rental revenue and in adjusted EBITDA.
“We are pleased with the progress we have made over the last five years as an independently traded public company and are now shifting into high gear to accelerate our growth and return to shareholders,” says Larry Silber, president and CEO at Herc. “We have strong momentum and intend to invest in new locations and add to our fleet to enhance our urban density, while improving operating leverage and scale. We intend to increase market share through both organic growth and mergers and acquisitions."
The company outlined new initiatives and set a three-year organic rental revenue goal of 12% to 15% compound annual growth from the midpoints of fiscal years 2021 through 2024. It also established an organic adjusted EBITDA goal of 17% to 20% on the same basis.
The initiatives include:
- Grow the core: Increase rental equipment capital expenditures at existing locations, while expanding the branch network through new greenfield locations and acquisitions in select markets.
- Expand specialty: Invest in specialty fleet, with a target of 30% of total OEC by 2024, and grow the specialty network throughout North America.
- Elevate technology: Enhance the customer experience by enabling mobile solutions and improving fleet utilization tracking and logistics management.
- Integrate ESG: Advance toward newly established 2030 goals for sustainability.
- Allocate capital: Operate against disciplined investment parameters for organic growth, strategic mergers and acquisitions and dividends.
“As we move into the next phase of our journey, we are committing to a capital allocation plan that balances our investment growth options between organic and acquisition growth. We also intend to enhance our returns to shareholders through the establishment of a quarterly dividend. We are well-positioned to execute our strategy and deliver value to all of our stakeholders,” he says.
“We are committed to delivering long-term sustainable value to shareholders with a balanced, disciplined and opportunistic approach to capital deployment. With our available liquidity, we plan to invest in organic growth and M&A, and inaugurate a quarterly dividend, the future growth of which will be in line with our long-term business performance,” Silber says.
The board of directors declared a quarterly dividend of $0.50 per share to shareholders of record on Oct. 20, 2021, to be paid on Nov. 4, 2021.
