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S&P lifts HERC, HERC Rentals
S&P said it raised its ratings on HERC Holdings Inc. and its subsidiary HERC Rentals Inc. to BB from BB- and the senior unsecured notes to BB- from B+. The 5 recovery rating (rounded estimate: 20%) on these notes is unchanged.
“HERC's total revenues grew almost 20% in 2023 due to higher equipment rentals and sales of used equipment. Equipment rentals grew by 12% (most of the growth was organic) as the result of higher pricing and a higher amount of fleet on rent. In 2024, we expect rental revenues will continue growing as rental rates continue to increase with inflation, construction and industrial activity expands, and the company grows its fleet through organic and inorganic investments,” the agency said in a press release.
S&P said it expects about $100 million-$200 million of free cash flow generation in 2024. “However, rental capital expenditures are largely discretionary in the near term, and higher-than-expected capital investments will reduce free cash flow generation.”
The outlook is stable.
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