Herc Rentals sees further industry consolidation

Herc Rentals sees an opportunity for further consolidation in the equipment rental industry as it looks to integrate its recent acquisition of H&E Equipment Services. 

Large metropolitan statistical areas (MSAs) present opportunities for consolidation and penetration in the highly fragmented industry, Herc President and Chief Executive Larry Silber said during the Barclays 42nd Annual Industrial Select Conference on Feb. 19. 

“There’s still a secular movement from ownership to rental, and we’ve only really been focusing on the top 100 MSAs, but we can always go to the next 50 MSAs to look for growth as we build out and achieve the share in where we’re focused,” he said. “There’s plenty of white space with lots of ‘mom and pops’ out there that would be ripe for consolidation at a later date, or greenfield opportunities in those markets where we want to build density.”

Herc acquisitions

With the acquisition, Herc can fill market segments that H&E could not address, while using H&E to fill some of its own product gaps, Silber said during the conference. 

“There’s plenty of white space from a product portfolio standpoint, because H&E is an outstanding business management team, great performance, but their product category is narrow,” he said. “Whether it’s additive on the [general rentals] or additive on the specialty or additive on the technology to give them capability to be involved in bigger national accounts as well as megaprojects, there’s white space there.” 

Herc Rentals has made 51 acquisitions over the past four years, further solidifying its position as the third-largest rental house in North America, according to the 2024 RER 100 published in May by Rental Equipment Register. 

“We’re going to break this down onto a regional basis and make sure that our region vice presidents are running each of these as well,” he said. “None of them are going to have more than 20 locations additive to any one particular region, and we already have a team of people out there that support all of this acquisition integration.” 

H&E integration 

Herc also intends to slow down on other deals and other green fields during the H&E integration, especially in terms of technology, Silber said during the conference. Herc also viewed H&E as one of only two quality assets that could be available, along with Sunstate Equipment Rental, ensuring that the acquisition was a must-get, despite causing a slowdown in other M&A activities. 

“We’ll complete what’s in process, certainly on green fields, as well as brown fields, and things they might have in order, but we won’t add anything new to the list,” he said. “It’s a big team of field people that we can flex to address this integration activity.” 

Meanwhile, at the end of the fourth quarter of 2024, the original equipment cost of H&E’s rental fleet was about $2.9 billion, up 5.5% year over year, according to the company’s earnings release today. Dollar utilization in Q4 finished at 38.2% compared to 40.3% in Q4 2023. 

Technology integration across the H&E brands remains key for Herc as it gets H&E onboard to quickly provide it visibility across the fleet and into fleet utilization, Silber said. 

“All of our tools that we use — whether it’s our optimist pricing tool or on-the-go fleet management and logistics tool and our click analytics, data analytics tool — give them that capability so they can improve their performance,” he said, “We believe integration today is one of our core competencies that we’ve developed over the last four years.” 

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