Financial Analysis

"Business Combinations The Company accounts for business combinations using the acquisition method as defined in ASC Topic 805, Business Combinations (""Topic 805""). Under this method of accounting, the purchase price allocations below reflect the estimated fair values, net of tax, of the respective assets acquired and liabilities assumed. On June 2, 2025, the Company completed the acquisition of H&E Equipment Services, Inc. (""H&E"") pursuant to the Agreement and Plan of Merger, dated as of February 19, 2025 (the ""Merger Agreement""). 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. 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. The acquisition (i) added scale and density in key rental regions, particularly in several of the largest rental regions in North America; (ii) created cross-sell opportunities of specialty equipment to an expanded customer base and (iii) increased availability of aerial, material handling and earthmoving equipment for the Company's customers. The Company acquired all of the outstanding common stock of H&E in exchange for $78.75 in cash and 0.1287 shares of Company common stock on a per-H&E share basis. The total purchase price for the acquisition was $4.8 billi …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

"Commitments and Contingencies Legal Proceedings The Company is subject to a number of claims and proceedings that generally arise in the ordinary conduct of its business. These matters include, but are not limited to, claims arising from the operation of rented equipment and workers' compensation claims. The Company does not believe that the liabilities arising from such ordinary course claims and proceedings will have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows. The Company has established reserves for matters where the Company believes the losses are probable and can be reasonably estimated. For matters where a reserve has not been established, the ultimate outcome or resolution cannot be predicted at this time, or the amount of ultimate loss, if any, cannot be reasonably estimated. Litigation is subject to many uncertainties and there can be no assurance as to the outcome of the individual litigated matters. It is possible that certain of the actions, claims, inquiries or proceedings could be decided unfavorably to the Company or any of its subsidiaries involved. Accordingly, it is possible that an adverse outcome from such a proceeding could exceed the amount accrued in an amount that could be material to the Company's consolidated financial condition, results of operations or cash flows in any particular reporting period. Off-Balance Sheet Commitments Indemnification Obligations In the ordinary course o …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Debt The Company's debt consists of the following (in millions): Weighted Average Effective Interest Rate at June 30, 2026 Weighted Average Stated Interest Rate at June 30, 2026 Fixed or Floating Interest Rate Maturity June 30, 2026 December 31, 2025 Senior Notes 2029 Notes 6.91% 6.63% Fixed 2029 $ 800 $ 800 2030 Notes 7.25% 7.00% Fixed 2030 1,650 1,650 2031 Notes 5.94% 5.75% Fixed 2031 600 600 2033 Notes 7.43% 7.25% Fixed 2033 1,100 1,100 2034 Notes 6.14% 6.00% Fixed 2034 600 600 Other Debt ABL Credit Facility N/A 5.00% Floating 2030 1,878 2,047 Term Loan Facility 5.64% 5.38% Floating 2032 746 750 AR Facility (a) N/A 4.48% Floating 2026 500 475 Finance lease liabilities 4.68% N/A Fixed 2026-2044 89 81 Unamortized debt issuance costs and debt discount (b) (51) (56) Total debt 7,912 8,047 Less: Current maturities of long-term debt (27) (26) Total long-term debt, net $ 7,885 $ 8,021 (a)The AR Facility is excluded from current maturities of long-term debt as the Company has the intent and ability to fund the AR Facility's borrowings on a long-term basis either by further extending the maturity date of the AR Facility or by utilizing the capacity available at the balance sheet date under the ABL Credit Facility. (b) Unamortized debt issuance costs totaling $10 million and $12 million related to the ABL Credit Facility and AR Facility as of June 30, 2026 and December 31, 2025, respectively, are included in ""Other long-term assets"" in the condensed consolidated balance sheets. T …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The Company sells its used rental equipment, new equipment, parts and supplies. Revenues recorded for each category are as follows (in millions): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Sales of rental equipment $ 110 $ 106 $ 248 $ 211 Sales of new equipment 4 7 10 12 Sales of parts and supplies 8 10 15 16 Total $ 122 $ 123 $ 273 $ 239

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"Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market or, if none exists, the most advantageous market, for the specific asset or liability at the measurement date (referred to as the ""exit price""). Fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability, including consideration of nonperformance risk. The Company assesses the inputs used to measure fair value using the three-tier hierarchy promulgated under U.S. GAAP. This hierarchy indicates the extent to which inputs used in measuring fair value are observable in the market. Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable. Level 2: Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset or liability at the measurement date and include …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"Goodwill and Intangible Assets Goodwill The following summarizes the Company's goodwill (in millions): June 30, 2026 December 31, 2025 Balance at the beginning of the period: Goodwill, gross $ 3,541 $ 1,334 Accumulated impairment losses (668) (664) Goodwill 2,873 670 Additions 2,201 Adjustments (a) (12) Currency translation (2) 2 Balance at the end of the period: Goodwill, gross 3,525 3,541 Accumulated impairment losses (666) (668) Goodwill $ 2,859 $ 2,873 (a) Goodwill adjustments were due to measurement period adjustments for the H&E acquisition, see Note 5, ""Business Combinations"" for additional information. Intangible Assets Intangible assets, net, consisted of the following major classes (in millions): June 30, 2026 Gross Carrying Amount Accumulated Amortization Net Carrying Value Finite-lived intangible assets: Customer relationships $ 1,554 $ (278) $ 1,276 Non-compete agreements 19 (12) 7 Internally developed software (a) 64 (19) 45 Total 1,637 (309) 1,328 Indefinite-lived intangible assets: Trade name 271 271 Total intangible assets, net $ 1,908 $ (309) $ 1,599 (a) Includes capitalized costs of $30 million yet to be placed into service. December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Value Finite-lived intangible assets: Customer relationships $ 1,552 $ (203) $ 1,349 Non-compete agreements 19 (10) 9 Internally developed software (a) 53 (17) 36 Total 1,624 (230) 1,394 Indefinite-lived intangible assets: Trade name 271 271 Total intan …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes Income tax provision for the three and six months ended June 30, 2026 was $5 million and $6 million, respectively, compared to a benefit of $11 million and $1 million in the same periods of 2025, respectively. The income tax provision in the current periods was primarily driven by the level of pretax income (loss), certain non-deductible expenses and foreign tax assessments, partially offset by tax credits.

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Leases The Company leases real estate, office equipment and service vehicles. The Company's leases have remaining lease terms of up to 21 years, some of which include options to extend the leases for up to 25 years. The Company determines the lease term used to record each lease by including the initial lease term and, in the case where there are options to extend, will include the option to extend if it has determined that it is reasonably certain that the Company would exercise those options. The Company also leases certain equipment that it rents to its customers where the payments vary based upon the amount of time the equipment is on rent. There are no fixed payments on these leases and, therefore, no lease liability or ROU assets have been recorded. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term. The components of lease expense consist of the following (in millions): Three Months Ended June 30, Six Months Ended June 30, Classification 2026 2025 2026 2025 Operating lease cost (a) Direct operating $ 54 $ 46 $ 108 $ 84 Finance lease costs: Amortization of ROU assets Depreciation and amortization 5 5 10 9 Interest on lease liabilities Interest expense, net 1 2 1 Sublease income Equipment rental revenue (18) (19) (37) (34) Net lease cost $ 42 $ 32 $ 83 $ 60 (a) Includes short-term leases of $11 million and $22 million for the three and six months …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"Recently Issued Accounting Pronouncements and Disclosure Rules Adopted Improvements to Accounting for Internal-Use Software In September 2025, the FASB issued Accounting Standards Update No. 2025-06, ""Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40)"" (""ASU 2025-06""), which is intended to modernize the accounting for internal-use software costs by removing the previous ""development stage"" model and introducing a model that aligns with current software development methods, such as the agile approach. Capitalization of eligible costs begins when management has authorized and committed to funding the software project, it is probable the project will be completed and the software will be used for the function intended. The Company early adopted this guidance prospectively on January 1, 2026 and it did not have an impact on its financial position, results of operations, or cash flows. Not Yet Adopted Disaggregation of Income Statement Expenses In November 2024, the FASB issued Accounting Standards Update No. 2024-03, ""Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40)"" (""ASU 2024-03""), which is intended to improve the disclosures about a public entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fis …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

"Arrangements with New Hertz On June 30, 2016, the Company, in its previous form as the holding company of both the existing equipment rental operations as well as the former vehicle rental operations (in its form prior to the Spin-Off, ""Hertz Holdings""), completed a spin-off (the ""Spin-Off"") of its global vehicle rental business through a dividend to stockholders of all of the issued and outstanding common stock of Hertz Rental Car Holding Company, Inc., which was re-named Hertz Global Holdings, Inc. (""New Hertz"") in connection with the Spin-Off. New Hertz is an independent public company and continues to operate its global vehicle rental business through its operating subsidiaries including The Hertz Corporation (""THC""). In connection with the Spin-Off, the Company entered into a separation and distribution agreement (the ""Separation Agreement"") with New Hertz. In connection therewith, the Company also entered into various other ancillary agreements with New Hertz to effect the Spin-Off and provide a framework for its relationship with New Hertz. The following summarizes some of the most significant agreements and relationships that Herc Holdings continues to have with New Hertz. Separation and Distribution Agreement The Separation Agreement sets forth the Company's agreements with New Hertz regarding the principal actions taken in connection with the Spin-Off. It also sets forth other agreements that govern aspects of the Company's relationship with New Hertz fol …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

"Revenue Recognition The Company is principally engaged in the business of renting equipment. Ancillary to the Companys principal equipment rental business, the Company also sells used rental equipment, new equipment and parts and supplies and offers certain services to support its customers. The Company operates in North America with revenue from the United States representing 94.6% and 94.7% of total revenue for the three and six months ended June 30, 2026, respectively, compared to 93.5% and 93.6% for the same periods in 2025. The Companys rental transactions are accounted for under Accounting Standards Codification (""ASC"") Topic 842, Leases (""Topic 842""). The Companys sale of rental and new equipment, parts and supplies along with certain services provided to customers are accounted for under ASC Topic 606, Revenue from Contracts with Customers (""Topic 606""). The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for such products or services. The following summarizes the applicable accounting guidance for the Companys revenues for the three and six months ended June 30, 2026 and 2025 (in millions): Three Months Ended June 30, 2026 2025 Topic 842 Topic 606 Total Topic 842 Topic 606 Total Revenues: Equipment rental $ 962 $ $ 962 $ 777 $ $ 777 Other rental revenue: Delivery and …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

"Segment Information Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker (""CODM"") in deciding how to allocate resources to an individual segment and in assessing performance. The Company's CODM has been identified as its Chief Executive Officer (""CEO""). The Company considered guidance in ASC Topic 280, Segment Reporting , and used the management approach in determining its reportable segment. The Company has determined that it has one operating segment and reportable segment: equipment rental. The equipment rental segment derives revenues from customers by renting equipment from the Company's fleet, which includes aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, lighting as well as its ProSolutions products and ProContractor tools. The Companys broad portfolio of equipment for rent is fungible and can be deployed throughout the geographies where the Company does business. Performance and resource allocation, particularly the amount and timing of new equipment purchases, are evaluated by the CODM using net income. Net income is also used when determining other capital allocation priorities such as completing acquisitions, paying dividends or repurchasing Company shares. Net income from the equipment rental segment is reported on the consolidated statement of operations as net income. Additionally, the meas …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing