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What changed in HERC HOLDINGS INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HERC HOLDINGS INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+183 added−149 removedSource: 10-K (2026-02-17) vs 10-K (2025-02-13)

Top changes in HERC HOLDINGS INC's 2025 10-K

183 paragraphs added · 149 removed · 127 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

4 edited+0 added−0 removed0 unchanged
Biggest changeChanges in and Disagreements with Accountants on Accounting and Financial Disclosures 80 ITEM 9A. Controls and Procedures 80 ITEM 9B. Other Information 80 ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 80 PART III ITEM 10. Directors, Executive Officers and Corporate Governance 81
Biggest changeChanges in and Disagreements with Accountants on Accounting and Financial Disclosures 88 ITEM 9A. Controls and Procedures 88
ITEM 1. Business 1 ITEM 1A. Risk Factors 9 ITEM 1B. Unresolved Staff Comments 20 ITEM 1C. Cybersecurity 21 ITEM 2. Properties 22 ITEM 3. Legal Proceedings 22 ITEM 4. Mine Safety Disclosures 22 PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 24 ITEM 6. Reserved 25 ITEM 7.
ITEM 1. Business 1 ITEM 1A. Risk Factors 9 ITEM 1B. Unresolved Staff Comments 21 ITEM 1C. Cybersecurity 22 ITEM 2. Properties 23 ITEM 3. Legal Proceedings 23 ITEM 4. Mine Safety Disclosures 23 PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 ITEM 6. Reserved 26 ITEM 7.
Financial Statements and Supplementary Data 37 Report of Independent Registered Public Accounting Firm 37 Consolidated Balance Sheets 39 Consolidated Statements of Operations 40 Consolidated Statements of Comprehensive Income 41 Consolidated Statements of Changes in Equity 42 Consolidated Statements of Cash Flows 43 Notes to Consolidated Financial Statements 45 ITEM 9 .
Financial Statements and Supplementary Data 38 Report of Independent Registered Public Accounting Firm 38 Consolidated Balance Sheets 41 Consolidated Statements of Operations 42 Consolidated Statements of Comprehensive Income 43 Consolidated Statements of Changes in Equity 44 Consolidated Statements of Cash Flows 45 Notes to Consolidated Financial Statements 47 ITEM 9 .
Management's Discussion and Analysis of Financial Condition and Results of Operations 26 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 36 ITEM 8.
Management's Discussion and Analysis of Financial Condition and Results of Operations 27 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 37 ITEM 8.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+17 added−2 removed159 unchanged
Biggest changeOur ability to manage these risks will depend, among other things, on financial market conditions as well as our financial and operating performance, which, in turn, is subject to a wide range of risks, including those described above under “—Risks Related to Our Business.” If our capital resources (including borrowings under our financing arrangements and access to other refinancing indebtedness) and operating cash flows are not sufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced, among other things, to do one or more of the following: (i) sell certain of our assets; (ii) reduce the size of our rental fleet; (iii) reduce or delay capital expenditures; (iv) reduce or eliminate our dividend; (v) obtain additional equity capital; (vi) forgo business opportunities, including acquisitions and joint ventures; or (vii) restructure or refinance all or a portion of our debt before maturity.
Biggest changeOur ability to manage these risks will depend, among other things, on financial market conditions as well as our financial and operating performance, which, in turn, is subject to a wide range of risks, including those described above under “—Risks Related to Our Business.” If our capital resources (including borrowings under our financing arrangements and access to other refinancing indebtedness) and operating cash flows are not sufficient to pay our obligations as they mature or to fund our liquidity needs, we may be 19 Table of Contents HERC HOLDINGS INC.
RISK FACTORS (continued) Our business is heavily reliant upon communication networks, centralized information technology ("IT") systems, and third-party technologies and services, and the concentration of our IT systems and sensitive information creates or increases risks for us, including the risk of the misuse or theft of information as a result of cybersecurity breaches or otherwise, which could harm our brand, reputation or competitive position and give rise to material liabilities.
Our business is heavily reliant upon communication networks, centralized information technology ("IT") systems, and third-party technologies and services, and the concentration of our IT systems and sensitive information creates or increases risks for us, including the risk of the misuse or theft of information as a result of cybersecurity breaches or otherwise, which could harm our brand, reputation or competitive position and give rise to material liabilities.
Our competitive position may be adversely affected if we are unable to maintain, upgrade or replace systems and technologies that allow us to manage our business in a competitive manner. We also may not achieve the benefits that we anticipate from an upgraded or replaced system and technology.
Our competitive position may be adversely affected if we are unable to maintain, upgrade or replace systems and technologies that allow us to manage our business and support our customers in a competitive manner. We also may not achieve the benefits that we anticipate from an upgraded or replaced system and technology.
The following factors, among others, may cause weakness in our markets, either temporarily or long-term: • a decrease in the expected levels of rental versus ownership of equipment; • government regulations and policies, including government initiatives for infrastructure improvements or expansions, or the policies of governments regarding exploration for, and production and development of, oil and natural gas reserves; • a prolonged or recurring shutdown of the U.S. and Canadian federal, state, provincial and local governments; • an increase in the cost of construction materials; • the level of supply and demand and relative prices or anticipated prices for oil and natural gas; • an overcapacity of fleet in the equipment rental industry; • a lack of availability of credit; • an increase in interest rates; • the imposition of tariffs or other measures that create barriers to or increase the costs associated with international trade; • labor strikes, work stoppages or other labor disruption in one or more markets we serve; • geopolitical events, including natural disasters, disruptions to markets due to war or armed conflict; and 9 Table of Contents HERC HOLDINGS INC.
The following factors, among others, may cause weakness in our markets, either temporarily or long-term: • a decrease in the expected levels of rental versus ownership of equipment; • government regulations and policies, including government initiatives for infrastructure improvements or expansions, or the policies of governments regarding exploration for, and production and development of, oil and natural gas reserves; • a prolonged or recurring shutdown of the U.S. and Canadian federal, state, provincial and local governments; • an increase in the cost of construction materials; • the level of supply and demand and relative prices or anticipated prices for oil and natural gas; • an overcapacity of fleet in the equipment rental industry; • a lack of availability of credit; • an increase in interest rates; • the imposition of tariffs or other measures that create barriers to or increase the costs associated with international trade; • labor strikes, work stoppages or other labor disruption in one or more markets we serve; • geopolitical events, including natural disasters, disruptions to markets due to war or armed conflict; and • terrorism or hostilities involving the United States or Canada. 9 Table of Contents HERC HOLDINGS INC.
Further, these restrictions also do not prevent us from incurring obligations that do not constitute indebtedness. If new debt or other obligations are added to our current debt and liability levels 19 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
Further, these restrictions also do not prevent us from incurring obligations that do not constitute indebtedness. If new debt or other obligations are added to our current debt and liability levels 20 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
In addition, New Hertz has assumed, among other things, liabilities associated with its vehicle rental business and related assets, whether such liabilities arose prior to or subsequent to the Spin-Off, and has agreed to indemnify us for any losses arising from such liabilities, as well as any other liabilities it assumed pursuant to the separation and distribution agreement.
RISK FACTORS (continued) In addition, New Hertz has assumed, among other things, liabilities associated with its vehicle rental business and related assets, whether such liabilities arose prior to or subsequent to the Spin-Off, and has agreed to indemnify us for any losses arising from such liabilities, as well as any other liabilities it assumed pursuant to the separation and distribution agreement.
Because substantially all of our assets are encumbered under our revolving credit facility, our ability to incur additional secured indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have a material adverse effect on our financial flexibility and liquidity and force us to attempt to incur additional unsecured indebtedness, which may not be available to us.
Because substantially all of our assets are encumbered under our credit facilities, our ability to incur additional secured indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have a material adverse effect on our financial flexibility and liquidity and force us to attempt to incur additional unsecured indebtedness, which may not be available to us.
In addition, we rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, and other functions.
RISK FACTORS (continued) In addition, we rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, and other functions.
Our business depends on our ability to maintain positive relations with our key national account customers, which collectively accounted for 45% of our rental revenue in 2024. We cannot assure you that all of these relationships will continue at current levels or on current terms. Our contracts with our customers generally do not obligate them to rent equipment from us.
Our business depends on our ability to maintain positive relations with our key national account customers, which collectively accounted for 49% of our rental revenue in 2025. We cannot assure you that all of these relationships will continue at current levels or on current terms. Our contracts with our customers generally do not obligate them to rent equipment from us.
As of December 31, 2024, we had unutilized U.S. federal net operating loss carryforwards of approximately $136 million. Our ability to use such tax attributes to offset future taxable income and tax liabilities may be significantly limited if we experience an "ownership change" as defined in Section 382(g) of the Code.
As of December 31, 2025, we had unutilized U.S. federal net operating loss carryforwards of approximately $253 million. Our ability to use such tax attributes to offset future taxable income and tax liabilities may be significantly limited if we experience an "ownership change" as defined in Section 382(g) of the Code.
As our rental equipment ages, the cost of maintaining such equipment, if not replaced within a certain period of time, and the risk of fleet equipment being out of service, generally increase. As of December 31, 2024, the average age of our rental equipment fleet was approximately 46 months.
As our rental equipment ages, the cost of maintaining such equipment, if not replaced within a certain period of time, and the risk of fleet equipment being out of service, generally increase. As of December 31, 2025, the average age of our rental equipment fleet was approximately 45 months.
As of December 31, 2024, there were 28.4 million shares of our common stock outstanding, which are freely transferable without restriction or further registration under the Securities Act of 1933, as amended (the “Securities Act”), unless held or acquired by our “affiliates” as that term is defined in Rule 144 under the Securities Act.
As of December 31, 2025, there were 33.3 million shares of our common stock outstanding, which are freely transferable without restriction or further registration under the Securities Act of 1933, as amended (the “Securities Act”), unless held or acquired by our “affiliates” as that term is defined in Rule 144 under the Securities Act.
As of December 31, 2024 and 2023, the aggregate amounts accrued for environmental liabilities, including liability for environmental indemnities, reflected in the Company's consolidated balance sheets in "Accrued liabilities" were $0.5 million and $0.4 million, respectively.
As of December 31, 2025 and 2024, the aggregate amounts accrued for environmental liabilities, including liability for environmental indemnities, reflected in our consolidated balance sheets in "Accrued liabilities" were $0.4 million and $0.5 million, respectively.
RISK FACTORS (continued) our current processes and customer-facing tools in response to changes in technology or in customer expectations is essential in maintaining our competitive position and maintaining current levels of customer satisfaction. We may experience technical or other difficulties that could delay or prevent the development or implementation of new technologies.
Our ability to continually improve our current processes and customer-facing tools in response to changes in technology or in customer expectations is essential in maintaining our competitive position and maintaining current levels of customer satisfaction. We may experience technical or other difficulties that could delay or prevent the development or implementation of new technologies.
Labor contracts covering the terms of employment of approximately 620 employees in the U.S. and 90 employees in Canada were in effect as of December 31, 2024 under approximately 28 active contracts with local unions, affiliated primarily with the International Brotherhood of Teamsters and the International Union of Operating Engineers. These contracts are renegotiated periodically.
Labor contracts covering the terms of employment of approximately 620 employees in the U.S. and 80 employees in Canada were in effect as of December 31, 2025 under approximately 30 active contracts with local unions, affiliated primarily with the International Brotherhood of Teamsters and the International Union of Operating Engineers. These contracts are renegotiated periodically.
As of December 31, 2024, we had total outstanding debt of approximately $4.1 billion, including our outstanding senior notes and the amounts drawn under our credit facilities.
As of December 31, 2025, we had total outstanding debt of approximately $8.1 billion, including our outstanding senior notes and the amounts drawn under our credit facilities.
Under these laws and regulations, regardless of fault we may be liable for, among other things, the cost of investigating and remediating contamination at our sites as well as sites to which we have sent hazardous wastes for disposal or treatment, and also fines and penalties for non-compliance.
Under these laws and regulations, regardless of fault we may be liable for, among other things, the cost of investigating and remediating contamination at our sites as well as sites to which we have sent hazardous wastes for disposal or treatment, and also fines and penalties for non-compliance. We use 16 Table of Contents HERC HOLDINGS INC.
Even if we are able to integrate future acquired businesses with our operations successfully, we cannot assure you that we will realize the cost savings, synergies or revenue enhancements that we may anticipate from such integration or that we will realize such benefits within the expected time frame.
Any acquired entities or assets may not enhance our results of operations. Even if we are able to integrate future acquired businesses with our operations successfully, we cannot assure you that we will realize the cost savings, synergies or revenue enhancements that we may anticipate from such integration or that we will realize such benefits within the expected time frame.
AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) • terrorism or hostilities involving the United States or Canada. Additionally, some of our customers may delay capital investment and maintenance even when favorable conditions exist in their industries or markets.
AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) Additionally, some of our customers may delay capital investment and maintenance even when favorable conditions exist in their industries or markets.
If we were to lose the services of members of our senior management team or other key talent, whether due to death, disability, resignation or termination of employment, our ability to successfully implement our business strategy, financial plans, marketing and other objectives could be significantly impaired.
If we were to lose the services of members of our senior management team or other key talent, whether due to death, disability, resignation or termination of employment, our ability to successfully implement our business strategy, financial plans, 14 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) marketing and other objectives could be significantly impaired.
Any future acquisitions or divestitures we pursue may involve a number of risks, including some or all of the following: • the diversion of management’s attention from our core business; • the disruption of our ongoing business; • inaccurate assessment of undisclosed liabilities; • potential known and unknown liabilities of the acquired or divested businesses and lack of adequate protections or potential related indemnities; • the inability to integrate our acquisitions without substantial costs, delays or other problems; • the loss of key customers or employees of the acquired or divested business; • increasing demands on our operational systems; • the integration of information systems and internal control over financial reporting; and 16 Table of Contents HERC HOLDINGS INC.
Any future acquisitions or divestitures we pursue may involve a number of risks, including some or all of the following: • the diversion of management’s attention from our core business; • the disruption of our ongoing business; • inaccurate assessment of undisclosed liabilities; • potential known and unknown liabilities of the acquired or divested businesses and lack of adequate protections or potential related indemnities; • the inability to integrate our acquisitions without substantial costs, delays or other problems; 17 Table of Contents HERC HOLDINGS INC.
We use hazardous materials to clean and maintain equipment, dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from storage tanks at certain of our locations.
AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) hazardous materials to clean and maintain equipment, dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from storage tanks at certain of our locations.
A security breach could adversely affect our corporate reputation as well as our operations, and could result in government enforcement actions, litigation against us, additional reporting requirements and/or oversight, restrictions on processing sensitive information, indemnification obligations, monetary fund diversions, interruptions in our operations, financial loss, the 11 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
A security breach could adversely affect our corporate reputation as well as our operations, and could result in government enforcement actions, litigation against us, additional reporting requirements and/or oversight, restrictions on processing sensitive information, indemnification obligations, monetary fund diversions, interruptions in our operations, financial loss, the imposition of penalties, and other similar harms.
New Hertz also will be responsible for a portion (typically 85%) of certain shared liabilities not otherwise specifically allocated to New Hertz or us under the separation and distribution agreement. We rely on New Hertz to manage the defense and resolution of these shared 17 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) liabilities.
New Hertz also will be responsible for a portion (typically 85%) of certain shared liabilities not otherwise specifically allocated to New Hertz or us under the separation and distribution agreement. We rely on New Hertz to manage the defense and resolution of these shared liabilities.
The amount of such liabilities could be greater than anticipated and have a material adverse effect on our business, financial condition, results of operations and cash flows.
The amount of such liabilities could be greater than anticipated and have a material adverse effect on our business, financial condition, results of operations and cash flows. 18 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
An extended period of economic disruption could materially affect our business, results of operations, access to sources of liquidity, particularly our cash flow from operations, and financial condition. 10 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
An extended period of economic disruption could materially affect our business, results of operations, access to sources of liquidity, particularly our cash flow from operations, and financial condition.
RISK FACTORS (continued) imposition of penalties, and other similar harms. A security breach and attendant consequences could cause the loss of customers, deter new customers from using our services, negatively impact our ability to grow and operate our business, and require that we invest significant additional resources related to our information security systems.
A security breach and attendant consequences could cause the loss of customers, deter new customers from using our services, negatively impact our ability to grow and operate our business, and require that we invest significant additional resources related to our information security systems. 12 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
Accordingly, decisions to reduce the size of our rental fleet in the event of an economic downturn or to respond to changes in rental demand are subject to the risk of loss based on the residual value of rental equipment.
A sale of equipment below its net book value could adversely affect our results of operations, liquidity and cash flows. Accordingly, decisions to reduce the size of our rental fleet in the event of an economic downturn or to respond to changes in rental demand are subject to the risk of loss based on the residual value of rental equipment.
Additionally, any failure of a system or technology could impede our ability to timely collect and report financial results in accordance with applicable laws and regulations. We may fail to respond adequately to changes in technology and customer demands. In recent years, our industry has been characterized by rapid changes in technology and customer demands.
Additionally, any failure of a system or technology could impede our ability to timely collect and report financial results in accordance with applicable laws and regulations. 13 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) We may fail to respond adequately to changes in technology and customer demands.
We also need to offer more localized assortments of our equipment to address local requirements and needs. If we do not successfully identify and provide the appropriate equipment to meet our customers’ needs and expectations, we may lose market share. We are dependent on our relationships with key suppliers to obtain equipment for our business.
We also need to offer more localized assortments of our equipment to address local requirements and needs. If we do not successfully identify and provide the appropriate equipment to meet our customers’ needs and expectations, we may lose market share. We may fail to realize all of the anticipated benefits of the acquisition of H&E Equipment Services, Inc.
A number of factors could affect the value received upon disposition of our equipment, including: • the market price for similar new equipment; • the age of the equipment, wear and tear on the equipment relative to its age and the performance of preventive maintenance; • the time of year that it is sold; • the supply of used equipment relative to the demand for used equipment, including as a result of changes in economic conditions or conditions in the markets that we serve; 14 Table of Contents HERC HOLDINGS INC.
A number of factors could affect the value received upon disposition of our equipment, including: • the market price for similar new equipment; • the age of the equipment, wear and tear on the equipment relative to its age and the performance of preventive maintenance; 15 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
The amount of any such expense or related natural resource damages for which we may be held responsible could be substantial. We cannot predict the potential financial impact on our business if adverse environmental, health, or safety conditions are discovered, or environmental, health, and safety requirements become more stringent.
We cannot predict the potential financial impact on our business if adverse environmental, health, or safety conditions are discovered, or environmental, health, and safety requirements become more stringent.
For example, industry participants have taken advantage of new technologies, including digital tools, SaaS offerings and cloud computing, to improve fleet efficiency, decrease customer wait times and improve customer satisfaction. Our ability to continually improve 12 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
In recent years, our industry has been characterized by rapid changes in technology and customer demands. For example, industry participants have taken advantage of new technologies, including digital tools, SaaS offerings and cloud computing, to improve fleet efficiency, decrease customer wait times and improve customer satisfaction.
RISK FACTORS (continued) Due to seasonality, especially in the construction industry, any occurrence that disrupts rental activity during our peak periods could materially adversely affect our results of operations, liquidity and cash flows.
In addition, if we are unable to attract and retain qualified key talent, we may not be able to effectively and efficiently manage our business and execute our business plan. Due to seasonality, especially in the construction industry, any occurrence that disrupts rental activity during our peak periods could materially adversely affect our results of operations, liquidity and cash flows.
AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) • possible adverse effects on our reported results of operations or financial position, particularly during the first several reporting periods after an acquisition or divestiture is completed. Any acquired entities or assets may not enhance our results of operations.
RISK FACTORS (continued) • the loss of key customers or employees of the acquired or divested business; • increasing demands on our operational systems; • the integration of information systems and internal control over financial reporting; and • possible adverse effects on our reported results of operations or financial position, particularly during the first several reporting periods after an acquisition or divestiture is completed.
We regularly possess, collect, receive, store, process, generate, use, disclose, transmit, protect, and handle non-public information about individuals and businesses, including both credit and debit card information and other proprietary, sensitive and confidential personal information (collectively, sensitive information). In addition, our customers regularly transmit sensitive information to us via the Internet and through other electronic means.
We regularly possess, collect, receive, store, process, generate, use, disclose, transmit, protect, and handle non-public information about individuals and businesses, including both credit and debit card information and other proprietary, sensitive 11 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) and confidential personal information (collectively, sensitive information).
We also indemnify various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many 15 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) states and, in some instances, for natural resource damages.
We also indemnify various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expense or related natural resource damages for which we may be held responsible could be substantial.
We cannot assure you that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. If we cannot refinance or otherwise pay our obligations as they mature and fund our liquidity 18 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
We cannot assure you that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all.
Substantially all of our consolidated assets, including our rental fleet, are subject to security interests under our revolving credit facility.
Substantially all of our consolidated assets secure certain of our indebtedness, which could materially adversely affect our business and holders of our debt and equity. Substantially all of our consolidated assets, including our rental fleet, are subject to security interests under our credit facilities.
RISK FACTORS (continued) needs, our business, financial condition, results of operations, cash flows, liquidity, ability to obtain financing and ability to compete could be materially adversely affected. Substantially all of our consolidated assets secure certain of our indebtedness, which could materially adversely affect our business and holders of our debt and equity.
If we cannot refinance or otherwise pay our obligations as they mature and fund our liquidity needs, our business, financial condition, results of operations, cash flows, liquidity, ability to obtain financing and ability to compete could be materially adversely affected.
Removed
In addition, if we are unable to attract and retain qualified key talent, we may not be able to effectively and efficiently manage our business and execute our business plan. 13 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM lA.
Added
("H&E") or those benefits may take longer to realize than expected. We believe that there are significant benefits and synergies from the acquisition that may be realized through leveraging the complementary footprint and fleet mix of our Company and H&E.
Removed
AND SUBSIDIARIES ITEM lA. RISK FACTORS (continued) • inventory levels at original equipment manufacturers; and • the existence and capacities of different sales outlets. A sale of equipment below its net book value could adversely affect our results of operations, liquidity and cash flows.
Added
However, the efforts to realize these benefits and synergies will be a complex process and may disrupt our operations if not implemented in a timely and efficient manner. The full benefits of the acquisition, including the anticipated cost and revenue synergies, may not be realized as expected or may not be achieved within the anticipated timeframe, or at all.
Added
Failure to achieve the anticipated benefits of the acquisition could adversely affect our results of operation or cash flows, cause dilution to our earnings per share, decrease or delay any accretive effect of the acquisition and negatively impact the price of our common stock.
Added
Integration of H&E into our business may be difficult, costly and time-consuming, and the anticipated benefits and cost savings of the acquisition may not be realized. Our ability to realize the anticipated benefits of the acquisition will depend, to a large extent, on our ability to integrate H&E into our business.
Added
We cannot assure you that we will be able to successfully integrate H&E into our business or, if the integration is successfully accomplished, that the integration will not be more costly or take longer than presently contemplated.
Added
If we cannot successfully integrate H&E within the anticipated timeframe following the acquisition, we may not be able to realize the potential and anticipated benefits of the acquisition, which could have a material adverse effect on our business, financial condition and operating results.
Added
Our ability to realize the expected synergies and benefits of the acquisition is subject to a number of risk and uncertainties, many of which are outside of our control.
Added
These risks and uncertainties could adversely impact our business, financial condition and operating results, and include, among other things: • our ability to complete the timely integration of operations and systems, organizations, standards, controls, procedures, policies and technologies, as well as the harmonization of differences in the business cultures; • our ability to minimize the diversion of management attention from our ongoing business concerns during the process of integration; • our ability to retain the service of key management and other key personnel of both us and H&E; • our ability to preserve customer and other important relationships and resolve potential conflicts that may arise; • the risk that certain customers will opt to discontinue business with us; 10 Table of Contents HERC HOLDINGS INC.
Added
RISK FACTORS (continued) • the risk that H&E may have liabilities that we failed to or were unable to discover in the course of performing due diligence; • the risks associated with current macroeconomic trends (such as potential trade wars and rising energy costs) that could have a negative effect on the potential synergies associated with the combination; • the risk that integrating H&E into our business may be more difficult, costly or time-consuming than anticipated; • difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination; and • difficulties in managing the expanded operations of the combined company and related difficulties in managing the financial accounting and reporting processes associated with a larger combined company.
Added
We may encounter additional integration-related costs, fail to realize all of the benefits anticipated, or be subject to other factors that adversely affect our preliminary estimates regarding the combined company. In addition, even if the operations of H&E are integrated successfully, the full benefits of the acquisition may not be realized, including the synergies and cost savings that we expect.
Added
The occurrence of any of these events, individually or in combination, could have a material adverse effect on our business, financial condition and operating results. We are dependent on our relationships with key suppliers to obtain equipment for our business.
Added
In addition, our customers regularly transmit sensitive information to us via the Internet and through other electronic means.
Added
Cyber threats are increasing in number and sophistication, continually evolving, including with the increased use of artificial intelligence, making it difficult for us to anticipate and defend against such threats and vulnerabilities that can persist undetected over extended periods of time.
Added
For example, our business relies on the continued functionality and reliability of customer-facing systems, such as ProControl by Herc Rentals™, to enable customers to rent equipment and access our services.
Added
Any disruption, failure, or degradation of these systems, whether due to technical issues, cyber incidents, or delays in maintenance or upgrades, could prevent customers from completing transactions, impair customer satisfaction, damage our reputation, weaken our relationships with customers and result in lost revenue opportunities.
Added
RISK FACTORS (continued) • the time of year that it is sold; • the supply of used equipment relative to the demand for used equipment, including as a result of changes in economic conditions or conditions in the markets that we serve; • inventory levels at original equipment manufacturers; and • the existence and capacities of different sales outlets.
Added
RISK FACTORS (continued) forced, among other things, to do one or more of the following: (i) sell certain of our assets; (ii) reduce the size of our rental fleet; (iii) reduce or delay capital expenditures; (iv) reduce or eliminate our dividend; (v) obtain additional equity capital; (vi) forgo business opportunities, including acquisitions and joint ventures; or (vii) restructure or refinance all or a portion of our debt before maturity.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed17 unchanged
Biggest changeOn occasion, we use third parties (such as outside counsel, information security consultants, and software providers) to assist in these assessment and testing exercises. 21 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES Governance In 2024, the Board of Directors assumed direct oversight of our cybersecurity program and management of the associated risks.
Biggest changeOn occasion, we use third parties (such as outside counsel, information security consultants, and software providers) to assist in these assessment and testing exercises. 22 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES Governance The Board has direct oversight of our cybersecurity program and management of the associated risks.
Our ERM program is led by the Vice President of Internal Audit and our ERM Committee, which is comprised of members of senior management, including our CEO, Chief Financial Officer, Chief Information Officer ("CIO"), Chief Information Security Officer ("CISO") and Chief Legal Officer.
Our ERM program is led by the Vice President of Internal Audit and our ERM Committee, which is comprised of members of senior management, including our CEO, President, Chief Financial Officer, Chief Information Officer ("CIO"), Chief Information Security Officer ("CISO") and Chief Legal Officer.
Risk Management and Strategy As one of the critical elements of our overall ERM approach, our cybersecurity program is focused on the following key areas: Governance— In 2024, the Board of Directors (the "Board") assumed direct oversight of our cybersecurity program and management of the associated risks.
Risk Management and Strategy As one of the critical elements of our overall ERM approach, our cybersecurity program is focused on the following key areas: Governance— The Board of Directors (the "Board") has direct oversight of our cybersecurity program and management of the associated risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES As of February 7, 2025, we had 453 locations in the United States and Canada. We also operate regional headquarters, sales offices and service facilities in the foregoing countries in support of our equipment rental operations. Our principal executive offices are located in Bonita Springs, Florida.
Biggest changeITEM 2. PROPERTIES As of February 13, 2026, we had 604 locations in the United States and Canada. We also operate regional headquarters, sales offices and service facilities in the foregoing countries in support of our equipment rental operations. Our principal executive offices are located in Bonita Springs, Florida.
As of December 31, 2024, we owned approximately 5% of the locations from which we operate our equipment rental business, with the remainder leased. Those leases are typically triple net leases, where Herc is responsible for the ongoing expenses of the property, including real estate taxes, insurance, and maintenance, in addition to paying rent and utilities.
As of December 31, 2025, we owned approximately 6% of the locations from which we operate our equipment rental business, with the remainder leased. Those leases are typically triple net leases, where Herc is responsible for the ongoing expenses of the property, including real estate taxes, insurance, and maintenance, in addition to paying rent and utilities.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeBirnbaum also has held leadership responsibilities related to the Company's strategic planning, operational execution and M&A activities. Christian J. Cunningham. Mr. Cunningham joined the Company in September 2014 from DFC Global Corporation where he served as vice president, corporate HR and HR services since June 2013 with global responsibility for all human resource matters for corporate staff. Previously, Mr.
Biggest changeCunningham joined the Company in September 2014 from DFC Global Corporation where he served as vice president, corporate human resources and human resources services beginning June 2013 with global responsibility for all human resource matters for corporate staff. Previously, Mr.
Peres joined the Company in September 2017 from Sunoco Logistics, a publicly-traded, midstream energy company, where he served as vice president and chief information officer since 2012, leading the Sunoco Logistics Information Technology group. From 2005 to 2012, Mr.
Peres joined the Company in September 2017 from Sunoco Logistics, a publicly-traded, midstream energy company, where he served as vice president and chief information officer from 2012 to 2017, leading the Sunoco Logistics Information Technology group. From 2005 to 2012, Mr.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 22 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES Executive Officers of the Registrant The name, age, position and a description of the business experience of each of our executive officers is provided below. There is no family relationship among the executive officers or between any executive officer and a director.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 23 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES Executive Officers of the Registrant The name, age, position and a description of the business experience of each of our executive officers is provided below. There is no family relationship among the executive officers or between any executive officer and a director.
Silber most recently served as an executive advisor at Court Square Capital Partners, LLP, a private equity firm primarily investing in the business services, healthcare, general industrial and technology and telecommunications sectors, from April 2014 to May 2015. Mr.
Silber served as an executive advisor at Court Square Capital Partners, LLP, a private equity firm primarily investing in the business services, healthcare, general industrial and technology and telecommunications sectors, from April 2014 to May 2015. Mr.
Cunningham held the position of vice president, HR, compensation and benefits at Sunoco Inc. and Sunoco Logistics from 2010 to 2013. Prior to Sunoco, Mr.
Cunningham held the position of vice president, human resources, compensation and benefits at Sunoco Inc. and Sunoco Logistics from 2010 to 2013. Prior to Sunoco, Mr.
Peres held the position of director of corporate information technology at Sunoco, Inc., where he was responsible for all strategic and tactical aspects of technology across the Refining and Supply, Retail Marketing, Chemicals, Logistics and Coke business units.
Peres held the position of director of corporate information technology at Sunoco, Inc., where he was responsible for all strategic and tactical aspects of technology across the Refining and Supply, Retail Marketing, Chemicals, Logistics and Coke business units. He was previously director of Worldwide Financial Systems 24 Table of Contents HERC HOLDINGS INC.
He was previously director of Worldwide Financial Systems for Kulicke & Soffa Industries, Inc., a global manufacturer and supplier of semiconductor equipment, and before that he worked for Ernst & Young, including as an audit senior in its Assurance Services area. 23 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES Executive Officers of the Registrant (continued) S. Wade Sheek. Mr.
AND SUBSIDIARIES Executive Officers of the Registrant (continued) for Kulicke & Soffa Industries, Inc., a global manufacturer and supplier of semiconductor equipment, and before that he worked for Ernst & Young, including as an audit senior in its Assurance Services area. S. Wade Sheek. Mr.
Name Age Position Lawrence H. Silber 68 President and Chief Executive Officer, Director Mark Humphrey 53 Senior Vice President and Chief Financial Officer Aaron D. Birnbaum 59 Senior Vice President and Chief Operating Officer Christian J. Cunningham 63 Senior Vice President and Chief Human Resources Officer Tamir Peres 55 Senior Vice President and Chief Information Officer S.
Name Age Position Lawrence H. Silber 69 Chief Executive Officer, Director Aaron D. Birnbaum 60 President Mark Humphrey 54 Senior Vice President and Chief Financial Officer Christian J. Cunningham 64 Senior Vice President and Chief Human Resources Officer Tamir Peres 56 Senior Vice President and Chief Information Officer S.
Wade Sheek 48 Senior Vice President, Chief Legal Officer and Secretary Lawrence H. Silber. Mr. Silber joined the Company in May 2015. Prior to that, Mr.
Wade Sheek 49 Senior Vice President, Chief Legal Officer and Secretary Lawrence H. Silber . Mr. Silber joined the Company in May 2015. From May 2015 to December 2025, Mr. Silber also served as our president. Prior to that, Mr.
Silber previously served on the board of directors of SMTC Corporation, a mid-size provider of end-to-end electronics manufacturing services, from 2012 to 2015 (and from May 2013 through January 2014 served as its interim president and CEO). Mark Humphrey. Mr. Humphrey joined the Company in April 2017. Prior to his current role, Mr.
Silber previously served on the board of directors of SMTC Corporation, a mid-size provider of end-to-end electronics manufacturing services, from 2012 to 2015 (and from May 2013 through January 2014 served as its interim president and CEO). Aaron D. Birnbaum . Mr.
His nearly 30-year career also includes roles as chief financial officer for Compass Management Group, a property-management company, and nearly 10 years in public accounting with PricewaterhouseCoopers LLP. Aaron D. Birnbaum. Mr. Birnbaum served the Company and its predecessor business for more than 30 years. Prior to his current role, Mr.
His nearly 30-year career also includes roles as chief financial officer for Compass Management Group, a property-management company, and nearly 10 years in public accounting with PricewaterhouseCoopers LLP. Christian J. Cunningham. Mr.
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Birnbaum served as the Company’s Senior Vice President from 2017 to 2019 and served as a Regional Vice President from 2012 to 2017. As Senior Vice President, Mr. Birnbaum oversaw the Company's Western, Northwest, North Central and Canada regions as well as its Herc Entertainment Services® and Cinelease® specialty equipment rental units. Mr.
Added
Birnbaum has more than 30 years of experience in the equipment rental industry — all with Herc Rentals Inc. and its predecessor business. Prior to his current role, Mr. Birnbaum served as senior vice president and chief operating officer from January 2020 to December 2025 responsible for sales and operations. Prior to that, Mr.
Added
Birnbaum held various field leadership roles across the Company including region vice president and other responsibilities related to the Company’s strategic planning, operational execution and M&A activities. Mark Humphrey. Mr. Humphrey joined the Company in April 2017. Prior to his current role, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur industry peer group is comprised of publicly traded companies participating in the equipment rental industry and other relevant companies of comparable size in the broader industry in which we compete. Our industry peer group includes: Air Lease Corporation H&E Equipment Services Trinity Industries, Inc. Ashtead Group plc McGrath Rentcorp Triton International Ltd. Custom Truck One Source Inc. Pool Corp.
Biggest changeOur industry peer group is comprised of publicly traded companies participating in the equipment rental industry and other relevant companies of comparable size in the broader industry in which we compete. H&E Equipment Services, Inc. is included in our peer group and graph below until our acquisition date of June 2, 2025. 25 Table of Contents HERC HOLDINGS INC.
There were no share repurchases during the year ended December 31, 2024. As of December 31, 2024, the approximate dollar value that remains available for share purchases under the Share Repurchase Program is $161 million.
There were no share repurchases during the year ended December 31, 2025. As of December 31, 2025, the approximate dollar value that remains available for share purchases under the Share Repurchase Program is $161 million.
Recent Performance The following graph compares the cumulative total stockholder return on Herc Holdings common stock from December 31, 2019 through December 31, 2024, with the cumulative total returns of the Standard & Poor's Mid Cap 400 Trading Companies & Distributors Industry Index, and our industry peer group.
Recent Performance The following graph compares the cumulative total stockholder return on Herc Holdings common stock from December 31, 2020 through December 31, 2025, with the cumulative total returns of the Standard & Poor's Mid Cap 400 Trading Companies & Distributors Industry Index, and our industry peer group.
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock and Registered Holders Our common stock trades on the New York Stock Exchange ("NYSE") under the symbol "HRI". On February 7, 2025, there were 1,793 registered holders of our common stock.
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock and Registered Holders Our common stock trades on the New York Stock Exchange ("NYSE") under the symbol "HRI". On February 13, 2026, there were 2,256 registered holders of our common stock.
Dividends On December 6, 2024, the Company declared a quarterly dividend of $0.665 per share to record holders as of December 16, 2024, with payment date of December 27, 2024. The agreements governing our indebtedness restrict our ability to pay dividends.
Dividends On December 5, 2025, we declared a quarterly dividend of $0.70 per share to record holders as of December 15, 2025, with payment date of December 26, 2025. The agreements governing our indebtedness restrict our ability to pay dividends.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (Continued) The graph assumes that $100 was invested on December 31, 2019 over the indicated time periods and assumes reinvestment of all dividends, if any, paid on the securities.
WillScot Mobile Mini Holdings Corp. Federal Signal Corporation Rush Enterprises, Inc. Xylem Inc. GATX Corp. Terex Corporation The graph assumes that $100 was invested on December 31, 2020 over the indicated time periods and assumes reinvestment of all dividends, if any, paid on the securities.
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United Rentals, Inc. Fastenal Company Ritchie Bros Auctioneers Inc. WillScot Mobile Mini Holdings Corp. Federal Signal Corporation Rush Enterprises, Inc. Xylem Inc. GATX Corp. Terex Corporation 24 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 5.
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AND SUBSIDIARIES ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (Continued) Our industry peer group includes: Air Lease Corporation H&E Equipment Services, Inc Trinity Industries, Inc. Ashtead Group PLC McGrath RentCorp Triton International, Ltd. Custom Truck One Source Inc. Pool Corp. United Rentals, Inc. Fastenal Company Ritchie Bros Auctioneers, Inc.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeAdditionally, we amended and extended our account receivable securitization facility, which now matures August 31, 2025 and increased the aggregate commitments from $370 million to $400 million. As part of our capital allocation strategy, we have continued to pay quarterly dividends at $0.665 per share throughout 2024.
Biggest changeOn December 1, 2025 aggregate commitments were increased from $400 million to $475 million • Redeemed $1.2 billion outstanding principal of the 2027 Notes on December 16, 2025 at a redemption price of 100.00% using the combined net proceeds from offering of $600 million aggregate principal amount of 5.75% Senior Notes due 2031 and $600 million aggregate principal amount of 6.00% Senior Notes due 2034 Finally, as part of our capital allocation strategy, we have continued to pay quarterly dividends at $0.70 per share throughout 2025.
Our expenses primarily consist of: • Direct operating expenses (primarily wages and related benefits, facility costs and other costs relating to the operation and rental of rental equipment, such as delivery, maintenance and fuel); • Cost of sales of rental equipment, new equipment, parts and supplies; • Depreciation expense relating to rental equipment; • Selling, general and administrative expenses; and • Interest expense. 26 Table of Contents HERC HOLDINGS INC.
Our expenses primarily consist of: • Direct operating expenses (primarily wages and related benefits, facility costs and other costs relating to the operation and rental of rental equipment, such as delivery, maintenance and fuel costs); • Cost of sales of rental equipment, new equipment, parts and supplies; • Depreciation expense relating to rental equipment; • Selling, general and administrative expenses; • Transaction expenses; • Non-rental depreciation and amortization; and • Interest expense. 27 Table of Contents HERC HOLDINGS INC.
ITEM 6. RESERVED 25 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
ITEM 6. RESERVED 26 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
We invested in our rental equipment as part of our long-term capital expenditure plans, adding rental equipment strategically throughout our network in response to customer demand and to position ourselves for growth into 2025. Additionally, during 2024, we completed 9 acquisitions, adding 28 branches, totaling a net cash outflow of $600 million, while also opening 23 new greenfield locations.
We invested in our rental equipment as part of our long-term capital expenditure plans, adding rental equipment strategically throughout our network in response to customer demand and to position ourselves for growth into 2026.
The addition of new locations supports our long-term strategy to achieve greater density and scale in select urban markets across North America to better serve both our local and national customers.
We accelerated our growth strategy in 2025 with the acquisition of H&E, adding approximately 160 branches, while also opening 26 new greenfield locations, achieving greater density and scale in select urban markets to better serve both our local and national customers.
Removed
AND SUBSIDIARIES ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) 2024 Overview Our results for 2024 reflect the continued strength in the rental industry as demonstrated by our equipment rental revenues of $3.2 billion, an increase of 11% over 2023, reflecting positive pricing of 3.2% and increased volume of equipment on rent of 9.3%.
Added
AND SUBSIDIARIES ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Recent Developments and Economic Conditions Local markets continue to be impacted by the elevated interest rate environment and continued economic uncertainty.
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While our local markets have been impacted by the elevated interest rate environment, our diversification across industries and project types have shown continued strength in economic activity and we believe the operating environment continues to be favorable for equipment rental companies of scale. We continued to execute on company-wide initiatives to increase margins and utilization.
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Our diversification across industries and project types have contributed to the resiliency of our business and we believe the operating environment continues to favor equipment rental companies of scale. We actively monitor the impact of the dynamic macroeconomic environment and manage our business to adjust to such conditions.
Removed
Supporting our financial flexibility and continued investment in our business, we issued $800 million of aggregate principal amount of 6.625% senior unsecured notes due 2029, paying down a portion of our senior secured asset-based revolving credit facility allowing for over $1.8 billion of availability at the end of 2024.
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We have returned to a more normalized cadence of rental equipment expenditures and disposals, remaining mindful of the possibility we may experience supply chain disruptions in the future.
Removed
During the fourth quarter of 2023, we announced our plans to explore strategic alternatives for our Cinelease studio entertainment and lighting and grip equipment rental business ("Cinelease") and the Cinelease net assets were classified as assets held for sale.
Added
Although inflation appears to have stabilized, we have experienced and expect to continue to experience inflationary pressures, potentially as a result of tariffs imposed, a portion of which may be passed on to customers. Currently, we do not expect material direct impact of tariffs on our procurement costs in 2026.
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Cinelease continues to be actively marketed for sale and management expects a transaction to be completed in 2025. 27 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES
Added
There are also costs for which the pass through to customers is less direct, such as repairs and maintenance, and labor. We cannot predict the extent to which our financial condition, results of operations or cash flows will ultimately be impacted by these ongoing economic conditions, however, we believe we are well-positioned to operate effectively through the present environment.
Added
Capital Structure We took a number of actions related to our capital structure on June 2, 2025 to finance the acquisition of H&E including: • Issued $1.65 billion aggregate principal amount of 7.00% Senior Notes due 2030 and $1.1 billion aggregate principal amount of 7.25% Senior Notes due 2033 • Entered into a credit agreement with respect to a new senior secured asset-based revolving credit facility that provides for aggregate maximum borrowings of up to $4.0 billion (subject to availability under a borrowing base) and replaced the prior senior secured asset-based revolving credit facility entered into in 2019 • Entered into a credit agreement with respect to a senior secured term loan facility of $750 million Supporting our financial flexibility, liquidity and continued investment in our business, we also took the following actions during 2025: • Amended and extended our account receivable securitization facility on August 29, 2025, extending maturity to August 31, 2026.
Added
Acquisition of H&E Equipment Services, Inc. On June 2, 2025, we completed the acquisition of H&E by acquiring all of the outstanding common stock of H&E in exchange for $78.75 in cash and 0.1287 shares of our common stock on a per-H&E share basis.
Added
The total purchase price was $4.8 billion including cash payment of $2.9 billion and the issuance of approximately 4.7 million shares of our common stock to H&E's shareholders, valued at $584 million.
Added
H&E was a full-service equipment rental company that provided its customers with a mix of high-quality general rental fleet including aerial, earthmoving, material handling, and other lines of equipment.
Added
H&E served a diverse mix of customers across both construction and industrial markets through its network of approximately 160 branches in over 30 U.S. states. 28 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

53 edited+26 added−13 removed31 unchanged
Biggest changeMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) RESULTS OF OPERATIONS Years Ended December 31, ($ in millions) 2024 2023 $ Change % Change Equipment rental $ 3,189 $ 2,870 $ 319 11 % Sales of rental equipment 311 346 (35) (10) % Sales of new equipment, parts and supplies 37 38 (1) (3) % Service and other revenue 31 28 3 11 % Total revenues 3,568 3,282 286 9 % Direct operating 1,291 1,139 152 13 % Depreciation of rental equipment 679 643 36 6 % Cost of sales of rental equipment 224 252 (28) (11) % Cost of sales of new equipment, parts and supplies 24 25 (1) (4) % Selling, general and administrative 480 448 32 7 % Non-rental depreciation and amortization 127 112 15 13 % Interest expense, net 260 224 36 16 % Loss on assets held for sale 194 — 194 — % Other expense (income), net (2) (8) 6 (75) % Income before income taxes 291 447 (156) (35) % Income tax provision (80) (100) 20 (20) % Net income $ 211 $ 347 $ (136) (39) % Year Ended December 31, 2024 Compared with Year Ended December 31, 2023 Equipment rental revenue increased $319 million, or 11%, during the year ended 2024 primarily due to higher volume of equipment on rent of 9.3% and pricing growth of 3.2% over the same period in the prior year.
Biggest changeRESULTS OF OPERATIONS Years Ended December 31, ($ in millions) 2025 2024 $ Change % Change Equipment rental $ 3,770 $ 3,189 $ 581 18 % Sales of rental equipment 509 311 198 64 % Sales of new equipment, parts and supplies 63 37 26 70 % Service and other revenue 34 31 3 10 % Total revenues 4,376 3,568 808 23 % Direct operating 1,602 1,291 311 24 % Depreciation of rental equipment 856 679 177 26 % Cost of sales of rental equipment 418 224 194 87 % Cost of sales of new equipment, parts and supplies 42 24 18 75 % Selling, general and administrative 564 469 95 20 % Transaction expenses 199 11 188 NM Non-rental depreciation and amortization 224 127 97 76 % Interest expense, net 416 260 156 60 % Loss on assets held for sale 48 194 (146) (75) % Other expense (income), net 6 (2) 8 NM Income before income taxes 1 291 (290) (100) % Income tax provision — (80) 80 100 % Net income $ 1 $ 211 $ (210) (100) % NM - Not meaningful Year Ended December 31, 2025 Compared with Year Ended December 31, 2024 Equipment rental revenue increased $581 million, or 18%, during 2025 primarily due to an increase in average OEC on rent, which includes the impact of the June 2025 acquisition of H&E.
In connection with our impairment analysis for goodwill and indefinite-lived intangible assets conducted as of October 1, 2024, we assessed qualitative factors as described above to determine if it is more likely than not that goodwill and indefinite-lived assets may be impaired and concluded that there was no impairment related to such assets at such date.
In connection with our impairment analysis for goodwill and indefinite-lived intangible assets conducted as of October 1, 2025, we assessed qualitative factors as described above to determine if it is more likely than not that goodwill and indefinite-lived assets may be impaired and concluded that there was no impairment related to such assets at such date.
RECENT ACCOUNTING PRONOUNCEMENTS For a discussion of recent accounting pronouncements, see Note 2, "Basis of Presentation and Significant Accounting Policies" to the notes to our consolidated financial statements included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report. 35 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES
RECENT ACCOUNTING PRONOUNCEMENTS For a discussion of recent accounting pronouncements, see Note 2, "Basis of Presentation and Significant Accounting Policies" to the notes to our consolidated financial statements included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report. 36 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES
As a result of this ongoing assessment, we make periodic adjustments to depreciation rates of rental equipment in response to changing market conditions. During the years ended December 31, 2024 and 2023, there were no material adjustments to our depreciation rates.
As a result of this ongoing assessment, we make periodic adjustments to depreciation rates of rental equipment in response to changing market conditions. During the years ended December 31, 2025 and 2024, there were no material adjustments to our depreciation rates.
The Company will determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
We will determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
Under the terms of our ABL Credit Facility, our AR Facility and our Notes, we are not subject to ongoing financial maintenance covenants; however, under the ABL Credit Facility, failure to maintain certain levels of liquidity will subject us to a contractually specified fixed charge coverage ratio of not less than 1:1 for the four quarters most recently ended.
Under the terms of our New ABL Credit Facility, our AR Facility, our Term Loan Facility and our Notes, we are not subject to ongoing financial maintenance covenants; however, under the New ABL Credit Facility, failure to maintain certain levels of liquidity will subject us to a contractually specified fixed charge coverage ratio of not less than 1:1 for the four quarters most recently ended.
To the extent that the useful lives of all of our rental equipment were to increase or decrease by one year, we estimate that our annual depreciation expense would decrease or increase by approximately $60 million or $75 million, respectively.
To the extent that the useful lives of all of our rental equipment were to increase or decrease by one year, we estimate that our annual depreciation expense would decrease or increase by approximately $75 million or $100 million, respectively.
See Note 11, "Debt" included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report for more information. As of December 31, 2024, $34 million of standby letters of credit were issued and outstanding, none of which have been drawn upon.
See Note 11, "Debt" included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report for more information. As of December 31, 2025, $53 million of standby letters of credit were issued and outstanding, none of which have been drawn upon.
Our practice is to maintain sufficient liquidity through cash from operations, our ABL Credit Facility and our AR Facility to mitigate the impacts of any adverse financial market conditions on our operations.
Our practice is to maintain sufficient liquidity through cash from operations, our New ABL Credit Facility and AR Facility (together, the "Facilities") to mitigate the impacts of any adverse financial market conditions on our operations.
Covenants Our ABL Credit Facility, our AR Facility and our 2027 and 2029 Notes (collectively, the "Notes") contain a number of covenants that, among other things, limit or restrict our ability to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make certain restricted payments (including paying dividends, redeeming stock or making other distributions), create liens, make investments, make acquisitions, engage in mergers, fundamentally change the nature of our business, make capital expenditures, or engage in certain transactions with certain affiliates.
Covenants Our New ABL Credit Facility, our AR Facility, our Term Loan Facility and our 2029 Notes, our 2030 Notes, our 2031 Notes, our 2033 Notes, and our 2034 Notes (collectively, the "Notes") contain a number of covenants that, among other things, limit or restrict our ability to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make certain restricted payments (including paying dividends, redeeming stock or making other distributions), create liens, make investments, make acquisitions, engage in mergers, fundamentally change the nature of our business, make capital expenditures, or engage in certain transactions with certain affiliates.
For the year ended December 31, 2024 and 2023, the statements of operations of Herc Holdings and Herc were identical with the exception of interest expense on the debt held at Herc Holdings that is not reflected in the statement of operations of Herc.
For the years ended December 31, 2025 and 2024, the statements of operations of Herc Holdings and Herc were identical with the exception of interest expense on the debt held at Herc Holdings that is not reflected in the statement of operations of Herc.
The ABL Credit Facility had $216 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.
The New ABL Credit Facility had $197 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.
As of December 31, 2024, we had approximately $4.1 billion of total nominal indebtedness outstanding. Our liquidity as of December 31, 2024 consisted of cash and cash equivalents of $83 million and unused commitments of approximately $1.8 billion under our ABL Credit Facility. See "Borrowing Capacity and Availability" below for further discussion.
As of December 31, 2025, we had approximately $8.1 billion of total nominal indebtedness outstanding. Our liquidity as of December 31, 2025 consisted of cash and cash equivalents of $52 million and unused commitments of approximately $1.9 billion under our New ABL Credit Facility. See "Borrowing Capacity and Availability" below for further discussion.
Subsequent changes to enacted tax rates will result in changes to deferred taxes and any related valuation allowances. We have recorded a deferred tax asset for unutilized net operating loss carryforwards in various tax jurisdictions. The Company has determined not to assert that earnings from foreign operations are permanently reinvested.
Subsequent changes to enacted tax rates will result in changes to deferred taxes and any related valuation allowances. We have recorded a deferred tax asset for unutilized net operating loss carryforwards in various tax jurisdictions. We have determined not to assert that earnings from foreign operations are permanently reinvested. Therefore, we recognize deferred taxes on foreign earnings as appropriate.
During the year ended December 31, 2024, we recorded an asset impairment charge related to Cinelease of $129 million as discussed further in Note 8, "Assets Held for Sale." In 2023, there were no asset impairment charges and for the year ended December 31, 2022, we recorded asset impairment charges of $3.5 million.
During the year ended December 31, 2025, we recorded an asset impairment charge related to Cinelease of $49 million as discussed further in Note 8, "Assets Held for Sale." In 2024, we recorded an asset impairment charge related to Cinelease of $194 million, and there were no asset impairment charges for the year ended December 31, 2023.
In accordance with ASC Topic 740, Income Taxes , the Company recognizes, in its consolidated financial statements, the impact of the Company's tax positions that are more likely than not to be sustained upon examination.
In accordance with ASC Topic 740, Income Taxes , we recognize, in its consolidated financial statements, the impact of our tax positions that are more likely than not to be sustained upon examination.
We regularly review our cash positions and our determination of permanent reinvestment of foreign earnings. If we determine that all or a portion of such foreign earnings are repatriated, we may be subject to additional foreign withholding taxes and U.S. state income taxes. Many foreign jurisdictions impose taxes on distributions to other jurisdictions.
If we determine that all or a portion of such foreign earnings are repatriated, we may be subject to additional foreign withholding taxes and U.S. state income taxes. Many foreign jurisdictions impose taxes on distributions to other jurisdictions.
We believe that cash generated from operations and cash received from the disposal of equipment, together with amounts available under the ABL Credit Facility and the AR Facility or other financing arrangements will be sufficient to meet working capital requirements and anticipated capital expenditures, and other strategic uses of cash, if any, and debt payments, if any, over the next twelve months.
We believe that cash generated from operations and cash received from the disposal of equipment, together with amounts available under the Facilities or other financing arrangements will be sufficient to meet working capital requirements, anticipated capital expenditures, payment of dividends, and debt payments, if any, over the next twelve months. 30 Table of Contents HERC HOLDINGS INC.
The effective tax rate during 2024 was 27% compared to 22% in 2023. The rate increase was driven by non-deductible goodwill impairment of $14 million in 2024, a reduction in the benefit related to stock-based compensation of $3 million in 2024 compared to $12 million in 2023, and certain other non-deductible expenses.
The income tax provision was $80 million with an effective tax rate of 27% in 2024. The effective tax rate in 2024 was driven by non-deductible goodwill impairment of $14 million, a benefit of $3 million related to stock-based compensation and certain other non-deductible expenses.
The discount rate used to value the pension liabilities and related expenses and the expected rate of return on plan assets are the two most significant assumptions impacting pension expense. The discount rate used is a market-based 32 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
The discount rate used to value the pension liabilities and related expenses and the expected rate of return on plan assets are the two most significant assumptions impacting pension expense. The discount rate used is a market-based rate as of the valuation date.
For further information on the terms of our Notes, ABL Credit Facility and AR Facility see Note 11, "Debt" included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report.
For further information on the terms of our Notes, New ABL Credit Facility, Term Loan Facility and AR Facility see Note 11, "Debt" included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report. For a discussion of the risks associated with our indebtedness, see Part I, Item 1A "Risk Factors" contained in this Report.
The following table summarizes the change in cash and cash equivalents for the periods shown (in millions): Years Ended December 31, 2024 2023 $ Change Cash provided by (used in): Operating activities $ 1,225 $ 1,086 $ 139 Investing activities (1,511) (1,581) 70 Financing activities 299 512 (213) Effect of exchange rate changes (1) — (1) Net change in cash and cash equivalents $ 12 $ 17 $ (5) Year Ended December 31, 2024 Compared with Year Ended December 31, 2023 Operating Activities During the year ended December 31, 2024, we generated $139 million more cash from operating activities compared with the same period in 2023.
The following table summarizes the change in cash and cash equivalents for the periods shown (in millions): Years Ended December 31, 2025 2024 $ Change Cash provided by (used in): Operating activities $ 1,085 $ 1,225 $ (140) Investing activities (4,944) (1,511) (3,433) Financing activities 3,827 299 3,528 Effect of exchange rate changes 1 (1) 2 Net change in cash and cash equivalents $ (31) $ 12 $ (43) Year Ended December 31, 2025 Compared with Year Ended December 31, 2024 Operating Activities During the year ended December 31, 2025, we generated $140 million less cash from operating activities compared with the same period in 2024.
The SPE assets are owned by the SPE and are not available to settle the obligations of the Company or any of its other subsidiaries. Substantially all of the remaining assets of Herc and certain of its U.S. and Canadian subsidiaries are encumbered in favor of our lenders under our ABL Credit Facility.
The accounts receivable and other assets of the SPE are encumbered in favor of the lenders under our AR Facility. The SPE assets are owned by the SPE and are not available to settle the obligations of the Company or any of its other subsidiaries.
Creditors under the Facilities have a claim on specific pools of assets as collateral as identified in each credit agreement. Our ability to borrow under the Facilities is a function of, among other things, the value of the assets in the relevant collateral pool.
Our ability to borrow under the Facilities is a function of, among other things, the value of the assets in the relevant collateral pool.
None of such assets are available to satisfy the claims of our general creditors. See Note 11, "Debt" included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report for more information.
See Note 11, "Debt" included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report for more information.
Rental Equipment Our principal assets are rental equipment, which represented 53.6% and 54.3% of our total assets as of December 31, 2024 and 2023, respectively. Rental equipment consists of equipment utilized in our equipment rental operations. When rental equipment is acquired, we use historical experience, industry residual value guidebooks and the monitoring of market conditions to set depreciation rates.
Rental equipment consists of equipment utilized in our equipment rental operations. When rental equipment is acquired, we use historical experience, industry residual value guidebooks and the monitoring of market conditions to set depreciation rates.
Our ongoing assessments of the probable outcomes of the examinations and related tax accruals require judgment and could increase or decrease our effective tax rate as well as impact our operating results.
We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, accruals for tax contingencies are established based on the probable outcomes of such matters. Our ongoing assessments of the probable outcomes of the examinations and related tax accruals require judgment and could increase or decrease our effective tax rate as well as impact our operating results.
Therefore, the Company recognizes deferred taxes on foreign earnings as appropriate. The Company has asserted that future earnings associated with the potential stock sale or liquidation of foreign subsidiaries is permanently reinvested. Accordingly, the Company has not recorded any deferred tax liabilities associated with these book-to-tax differences.
We have asserted that future earnings associated with the potential stock sale or liquidation of foreign subsidiaries is permanently reinvested. Accordingly, we have not recorded any deferred tax liabilities associated with these book-to-tax differences. We regularly review our cash positions and our determination of permanent reinvestment of foreign earnings.
Non-compete agreements, customer relationships and trade names and associated trademarks are valued based on an excess earnings or income approach based on projected cash flows and may be amortized over the useful life if they are determined to be finite-lived intangible assets. As part of an acquisition, the Company will also acquire other assets and assume liabilities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) names and associated trademarks are valued based on an excess earnings or income approach based on projected cash flows and may be amortized over the useful life if they are determined to be finite-lived intangible assets.
As of December 31, 2024, the appropriate levels of liquidity have been maintained, therefore this financial maintenance covenant is not applicable. At December 31, 2024, Herc Holdings' balance sheet was substantially identical to that of Herc, with the exception of the debt held by Herc Holdings (2029 Notes, 2027 Notes and ABL Credit Facility) and certain components of shareholders equity.
At December 31, 2025, Herc Holdings' balance sheet was substantially identical to that of Herc, with the exception of the debt held by Herc Holdings (Notes, Term Loan Facility and New ABL Credit Facility) and certain components of shareholders equity.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) rate as of the valuation date. For the expected return on assets assumption, we use a forward-looking rate that is based on the expected return for each asset class (including the value added by active investment management), weighted by the target asset allocation.
For the expected return on assets assumption, we use a forward-looking rate that is based on the expected return for each asset class (including the value added by active investment management), weighted by the target asset allocation. The past annualized long-term performance of the Plan's assets has generally been in line with the long-term rate of return assumption.
The estimated fair values of these intangible assets reflect various assumptions about discount rates, revenue growth rates, operating margins, terminal values, useful lives and other prospective financial information. Goodwill is calculated as the excess of the cost of the acquired entity over the net of the fair value of the assets acquired and the liabilities assumed.
The intangible assets acquired are non-compete agreements, customer relationships and trade names and associated trademarks. The estimated fair values of these intangible assets reflect various assumptions about discount rates, revenue growth rates, operating margins, terminal values, useful lives and other prospective financial information.
If the carrying value of the reporting unit is greater than its fair value, we recognize an impairment charge for the amount equal to that excess. A significant decline in the 33 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
If the carrying value of the reporting unit is greater than its fair value, we recognize an impairment charge for the amount equal to that excess. A significant decline in the projected cash flows or a change in the WACC used to determine fair value could result in a future goodwill impairment charge.
A reporting unit is an operating segment or a business one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic characteristics.
Goodwill impairment is deemed to exist if the carrying value of goodwill of a reporting unit exceeds its fair value. A reporting unit is an operating segment or a business one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management.
Rental equipment is valued utilizing either a cost or market approach, or a combination of these methods, depending on the asset being valued and the availability of market data. The intangible assets that the Company has acquired are non-compete agreements, customer relationships and trade names and associated trademarks.
Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of the acquisitions. Rental equipment is valued utilizing either a cost or market approach, or a combination of these methods, depending on the asset being valued and the availability of market data.
Years Ended December 31, 2024 2023 Rental equipment expenditures $ 1,048 $ 1,320 Disposals of rental equipment (288) (325) Net rental equipment expenditures $ 760 $ 995 Net capital expenditures for rental equipment decreased $235 million during the year ended December 31, 2024 compared to the same period in 2023, as we optimize our fleet by continuing to strategically invest in growth markets as part of our long-term capital expenditure plans.
Years Ended December 31, 2025 2024 Rental equipment expenditures $ 1,097 $ 1,048 Disposals of rental equipment (448) (288) Net rental equipment expenditures $ 649 $ 760 Net capital expenditures for rental equipment decreased $111 million during the year ended December 31, 2025 compared to the same period in 2024.
The past annualized long-term performance of the Plan's assets has generally been in line with the long-term rate of return assumption. Business Combinations The Company has made multiple acquisitions and may continue to make acquisitions in the future. The assets acquired and liabilities assumed are recorded based on their respective fair values at the date of acquisition.
Business Combinations We have made multiple acquisitions and may continue to make acquisitions in the future. The assets acquired and liabilities assumed are recorded based on their respective fair values at the date of acquisition. Determining the fair value of the assets and liabilities acquired is judgmental in nature and can involve the use of significant estimates and assumptions.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Dividends On December 6, 2024, we declared a quarterly dividend of $0.665 per share to record holders as of December 16, 2024, with payment date of December 27, 2024.
Dividends On December 5, 2025, we declared a quarterly dividend of $0.70 per share to record holders as of December 15, 2025, with payment date of December 26, 2025.
Loss on assets held for sale was $194 million during 2024 to adjust the carrying value of Cinelease net assets to its fair value less estimated costs to sell. Income tax provision was $80 million during the year ended 2024 when compared with $100 million for the same period in 2023.
Loss on assets held for sale was $48 million during 2025 to adjust the carrying value of Cinelease net assets to its fair value less estimated costs to sell prior to its divestiture on July 31, 2025. Due to the level of pretax income, the income tax provision and effective tax rate were zero during 2025.
In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing 34 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) authority with full knowledge of all relevant information.
In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority with full knowledge of all relevant information. Upon determination that a tax position meets the more-likely-than-not recognition threshold, it is measured to determine the amount of benefit to recognize in the financial statements.
Depreciation of rental equipment increased $36 million, or 6%, during 2024 due to the increase in average fleet size. Non-rental depreciation and amortization increased $15 million, or 13%, primarily due to amortization of intangible assets related to acquisitions. Selling, general and administrative expenses increased $32 million, or 7%.
Non-rental depreciation and amortization increased $97 million, or 76%, primarily due to amortization of intangible assets related to the H&E and Otay acquisitions and an increase in non-rental asset depreciation resulting from the growth of the business. Selling, general and administrative expenses increased $95 million, or 20%.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In connection with the AR Facility, we sell accounts receivable on an ongoing basis to a wholly-owned special-purpose entity (the "SPE"). The accounts receivable and other assets of the SPE are encumbered in favor of the lenders under our AR Facility.
We refer to the amount of debt we can borrow given a certain pool of assets as the "Borrowing Base." In connection with the AR Facility, we sell accounts receivable on an ongoing basis to a wholly-owned special-purpose entity (the "SPE").
As of December 31, 2024, the following was available to us (in millions): Remaining Capacity Availability Under Borrowing Base Limitation ABL Credit Facility $ 1,845 $ 1,845 AR Facility — — Total $ 1,845 $ 1,845 During the third quarter of 2024, we entered into an amendment to the AR Facility to increase the aggregate commitments from $370 million to $400 million and extend the maturity to August 31, 2025.
As of December 31, 2025, the following was available to us (in millions): Remaining Capacity Availability Under Borrowing Base Limitation New ABL Credit Facility $ 1,900 $ 1,880 AR Facility — — Total $ 1,900 $ 1,880 32 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
These other assets and liabilities typically include, but are not limited to, parts inventory, accounts receivable, accounts payable and other working capital items. Because of their short-term nature, the fair values of these other assets and liabilities generally approximate the book values on the acquired entities' balance sheets.
As part of an acquisition, we will also acquire other assets and assume liabilities. These other assets and liabilities typically include, but are not limited to, parts inventory, accounts receivable, accounts payable and other working capital items.
For additional discussion of our critical accounting policies and estimates, as well as our significant accounting policies, see Note 2, "Basis of Presentation and Significant Accounting Policies" to the notes to our consolidated financial statements included in Part II, Item 8 of this Report.
For additional discussion of our critical accounting policies and estimates, as well as our significant accounting policies, see Note 2, "Basis of 33 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
Goodwill and Indefinite-Lived Intangible Assets On an annual basis and at interim periods when circumstances require, we test the recoverability of our goodwill. Goodwill impairment is deemed to exist if the carrying value of goodwill of a reporting unit exceeds its fair value.
Because of their short-term nature, the fair values of these other assets and liabilities generally approximate the book values on the acquired entities' balance sheets. Goodwill and Indefinite-Lived Intangible Assets On an annual basis and at interim periods when circumstances require, we test the recoverability of our goodwill.
Selling, general and administrative expenses were 15.1% of equipment rental revenue in 2024 compared to 15.6% in the prior-year period due to continued focus on improving operating leverage while expanding revenues. 28 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
Selling, general and administrative expenses were 15.0% of equipment rental revenue in 2025 compared to 14.7% in the prior-year period.
Intangible assets with finite lives are amortized over the estimated economic lives of the assets, which range from five to 14 years. These assets are primarily amortized using the straight-line method, however, certain assets may be amortized using an accelerated method that reflects the economic benefit to us.
These assets are primarily amortized using the straight-line method, however, certain assets may be amortized using an accelerated method that 35 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) reflects the economic benefit to us.
We have assessed the guidance and performed our analysis using our two reporting units, core equipment rental and Cinelease.
However, components are aggregated as a single reporting unit if they have similar economic characteristics. We have assessed the guidance and performed our analysis using our one reporting unit, equipment rental.
Sales of rental equipment decreased $35 million, or 10%, during the year ended 2024 when compared to the year ended 2023. We continue to sell equipment in line with our fleet rotation planning to improve the equipment mix and manage fleet age.
Sales of rental equipment increased $198 million, or 64%, during 2025 when compared with 2024 as we increased the volume of sales to improve the equipment mix and utilization focusing on acquisition fleet. The margin on sales of rental equipment was 18% in 2025 compared to 28% in 2024.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Interest expense, net increased $36 million, or 16%, during the year ended 2024 when compared with the year ended 2023 due to higher average debt balances primarily to fund acquisition growth and invest in rental equipment.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Direct operating expenses increased $311 million, or 24%. Direct operating expenses were 42.5% of equipment rental revenue in 2025, compared to 40.5% in the prior-year period.
Financing activities primarily represent our changes in debt, which included the issuance of $800 million of senior unsecured notes due 2029 which were used to repay a portion of our ABL Credit Facility, resulting in net repayments of $391 million on our revolving lines of credit and securitization.
During 2025, we issued $3.95 billion in senior unsecured notes, a $750 million term loan facility and borrowed $4.59 billion on our revolving lines of credit and securitization which were used primarily to fund the acquisition of H&E and invest in rental equipment.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Investing Activities Cash used in investing activities decreased $70 million during 2024 when compared with the prior-year period. Our primary use of cash in investing activities is for the acquisition of rental equipment, non-rental capital expenditures and acquisitions.
Our primary use of cash in investing activities in 2025 was for acquisitions, the acquisition of rental equipment, and non-rental capital expenditures. Acquisition expenditures of $4.3 billion were related to the cash portion of the H&E acquisition.
Removed
Fleet rotation in the prior year period was accelerated due to easing of supply chain disruptions in certain categories of equipment. The margin on sales of rental equipment was 28% in 2024 compared to 27% in 2023. Direct operating expenses increased $152 million, or 13%.
Added
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Divestiture of Cinelease On July 31, 2025, we completed the divestiture of the Cinelease studio entertainment business for initial cash consideration of $100 million, subject to customary post-closing adjustments, and agreed upon earnouts pursuant to the purchase and sale agreement.
Removed
Direct operating expenses were 40.5% of equipment rental revenue in 2024, compared to 39.7% in the prior-year period, reflecting increases in (i) personnel-related expenses of $61 million primarily resulting from increased headcount in support of growth initiatives, including greenfields and acquisitions, (ii) facilities expense of $22 million as we have added more locations through acquisitions and opening greenfield locations, (iii) self insurance reserve increase of $21 million due to claims development attributable to unsettled cases and growth of the business, (iv) maintenance expense of $19 million resulting from our increased fleet size and higher volume in 2024, (v) re-rent expense of $11 million due to the corresponding increase in re-rent revenue, and (vi) delivery expense of $11 million due to increased volume of transactions and transfers of equipment between branches to drive fleet efficiency.
Added
We recognized a pre-tax gain on the divestiture of $1 million and used the net proceeds from the sale of Cinelease to repay indebtedness.
Removed
The increase was primarily due to increases in selling expenses, including commissions and other variable compensation, of $19 million, credit and collection expense of $5 million and general payroll of $4 million.
Added
On a pro forma basis including the standalone, pre-acquisition results of H&E and Otay, equipment rental revenue decreased 6% year-over-year partially resulting from ongoing moderation in certain local markets where H&E's customer base was heavily concentrated.
Removed
The increase was related to improved operating results primarily resulting from higher revenues coupled with improved operating leverage on costs, collection of receivables and the timing of payments on accounts payable and accrued liabilities. 29 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
Added
In addition, acquisition disruption at H&E, particularly within the salesforce, prior to the close of the acquisition contributed to the year-over-year decline, however, through initiatives post-close, this stabilized during the third quarter. The divestiture of Cinelease on July 31, 2025 also contributed to the year-over-year decline.
Removed
Additionally, we closed on 9 acquisitions during the year ended December 31, 2024 for a net cash outflow of $600 million, compared to cash outflow of $430 million during the year ended December 31, 2023. Financing Activities Cash provided by financing activities decreased $213 million during 2024 when compared with the prior-year.
Added
The decrease in margin sale of rental equipment in 2025 resulted from the fair value markup of the acquisition fleet sold, a larger volume of sales through the lower margin auction channel and continued normalization of used equipment pricing in the market. 29 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
Removed
Borrowings on the ABL Credit Facility were used primarily to fund acquisitions and invest in rental equipment during the period. Net borrowings in the prior year period were $740 million.
Added
The increase as a percent of rental revenue related to lower fixed cost absorption due to the impact of the ongoing moderation in certain local markets and the H&E acquisition, primarily with respect to field wages and benefits, facilities expense, maintenance, delivery and fuel.
Removed
Expenditures and disposals have decreased in the current year to maintain an appropriate mix of fleet and manage fleet age as the supply chain constraints experienced over the last several years have resolved in most equipment categories. Borrowing Capacity and Availability Our ABL Credit Facility and AR Facility (together, the "Facilities") provide our borrowing capacity and availability.
Added
Total company field wages and benefits increased $120 million and facilities expense increased $60 million as we have added team members and locations through the acquisition of H&E and opened 26 greenfield locations. Maintenance expense increased $62 million as total fleet size has increased, delivery expense increased $21 million and fuel increased $20 million on increased volume of rentals.
Removed
We refer to the amount of debt we can borrow given a certain pool of assets as the "Borrowing Base." 30 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
Added
Depreciation of rental equipment increased $177 million, or 26%, during 2025 due to the increase in average fleet size primarily the result of the H&E acquisition.
Removed
For a discussion of the risks associated with our indebtedness, see Part I, Item 1A "Risk Factors" contained in this Report. 31 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES ITEM 7.
Added
The increase as a percent of equipment rental revenue was primarily related to an increase of $28 million in sales compensation and related commissions and incentives to drive revenue growth, an increase in stock compensation expense and other general administrative costs of $31 million, partially offset by initial cost synergies related to reduction of H&E corporate overhead as well as overall cost control measures introduced to mitigate the impact of ongoing moderation in certain local markets.
Removed
Determining the fair value of the assets and liabilities acquired is judgmental in nature and can involve the use of significant estimates and assumptions. Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of the acquisitions.
Added
Transaction expenses were $199 million in 2025 compared to $11 million in 2024 due to costs incurred related to the acquisition of H&E, primarily the one-time termination fee paid on behalf of H&E of $64 million, advisory fees of $27 million, commitment fees related to the Bridge Facility of $21 million, and various other financial consulting, professional and legal fees.
Removed
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) projected cash flows or a change in the WACC used to determine fair value could result in a future goodwill impairment charge.
Added
Interest expense, net increased $156 million, or 60%, during 2025 when compared with 2024 primarily due to the new debt facilities issued to fund the H&E acquisition at a weighted average effective interest rate of 6.7%.
Removed
Subsequent to the assessment, it was determined that the goodwill attributable to Cinelease of $65 million was fully impaired as discussed further in Note 8, "Assets Held for Sale." Finite-Lived Intangible and Long-Lived Assets Finite-lived intangible assets include technology, customer relationships, and other intangibles.
Added
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In conjunction with the acquisition of H&E, we issued new debt consisting of $2.8 billion in senior unsecured notes with maturities in 2030 and 2033, a $750 million term loan facility and $2.5 billion of borrowings on a new asset based revolving credit facility, of which approximately $1.6 billion was used to repay borrowings on the prior asset-based revolving credit facility.
Removed
Upon determination that a tax position meets the more-likely-than-not recognition threshold, it is measured to determine the amount of benefit to recognize in the financial statements. We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, accruals for tax contingencies are established based on the probable outcomes of such matters.
Added
The combined weighted average interest rate on the new debt instruments upon issuance at June 2, 2025 was 6.8%. The term loan facility was amended in December 2025 to reduce the interest rate margin applicable thereunder while the principal amount remained unchanged.
Added
The term loan facility requires quarterly payments in an aggregate amount equal to 1.00% per annum beginning March 15, 2026, with the balance due at the maturity of the facility June 2, 2032. Also in December, we redeemed our senior unsecured notes due 2027 and issued $600 million each of senior unsecured notes due 2031 and 2034.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed8 unchanged
Biggest changeAssuming a hypothetical increase of one percentage point in interest rates on our ABL Credit Facility, AR Facility and cash and cash equivalents as of December 31, 2024, our pre-tax earnings would decrease by an estimated $19 million over a 12-month period.
Biggest changeAssuming a hypothetical increase of one percentage point in interest rates on our ABL Credit Facility, AR Facility and cash and cash equivalents as of December 31, 2025, our pre-tax earnings would decrease by an estimated $32 million over a 12-month period.
During the year ended December 31, 2024, our foreign subsidiaries accounted for less than 10% of our total revenue and total income before income taxes. Based on the size of our foreign operations relative to the Company as a whole, we do not believe that a 10% change in exchange rates would have a material impact on our earnings.
During the year ended December 31, 2025, our foreign subsidiaries accounted for less than 10% of our total revenue and total income before income taxes. Based on the size of our foreign operations relative to the Company as a whole, we do not believe that a 10% change in exchange rates would have a material impact on our earnings.
We do not engage in purchasing forward exchange contracts for speculative purposes. 36 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES
We do not engage in purchasing forward exchange contracts for speculative purposes. 37 Table of Contents HERC HOLDINGS INC. AND SUBSIDIARIES

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