Herc Holdings Inc. (HRI): Business Model Canvas [Dec-2025 Updated]

You're looking at Herc Holdings Inc. (HRI) right now, and frankly, the story is all about scale and integration, which is where the real money is made or lost in this sector. After swallowing up H&E Equipment Services, the focus has sharply shifted to realizing those promised synergies while managing a massive $9.9 billion fleet. The near-term risk is absorbing those integration costs while local construction softens, but the opportunity is clear: management is sticking to a $3.7 billion to $3.9 billion rental revenue target for 2025 by leaning hard on national accounts and specialty services like ProSolutions®. Let's break down the nine building blocks of this behemoth's model to see exactly how they plan to turn that massive asset base into shareholder value, because the numbers here tell a story of calculated, aggressive growth.

Herc Holdings Inc. (HRI) - Canvas Business Model: Key Partnerships

You're looking at the backbone of Herc Holdings Inc.'s operational scale, which relies heavily on external relationships for both capital structure and physical assets. The partnerships here are about securing the means to operate and grow the fleet, plus managing the balance sheet effectively.

Key equipment manufacturers for fleet procurement

Herc Holdings Inc. partners with various manufacturers to maintain and expand its fleet, which includes classic equipment like aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment. The company's capital expenditure strategy is a key indicator of this partnership volume.

For 2025, Herc Holdings affirmed expectations for gross fleet Capital Expenditure (CapEx) in the range of $900 million to $1.1 billion. Furthermore, the company planned for equipment disposals at Original Equipment Cost (OEC) between $1.1 billion and $1.2 billion for the year 2025.

Financial institutions for refinancing $1.2 billion in senior notes

Herc Holdings Inc. actively manages its debt profile through partnerships with financial institutions in private placement offerings. As of December 2025, the company priced a significant debt restructuring.

The transaction involved offering $1.2 billion in senior unsecured notes to refinance existing debt. This offering consisted of two tranches:

• $600 million of 5.750% notes due in 2031.
• $600 million of 6.000% notes due in 2034.

The proceeds were intended to redeem all $1.2 billion of the existing 5.50% Senior Notes due in 2027. The expected closing date for the new notes was on or about December 16, 2025. This move was made while the company managed a total debt of $9.8 billion as of Q3 2025, against a market capitalization of approximately $4.4 billion.

Technology vendors for ProControl™ and unified ERP systems

Herc Holdings Inc. relies on technology vendors to support its operational systems, including the ProControl platform, which is noted for enhancing fleet management and customer service. A major partnership milestone involved the integration of acquired systems.

Following the acquisition of H&E Equipment Services, the company completed the full systems integration across all branches in just 90 days, a timeline significantly faster than the typical 6 to 18 months for companies of similar size and complexity. Herc Holdings aims to grow its specialty network by 25% in 2026, supported by these technology platforms.

• Platform in use: ProControl for fleet management.
• Integration Speed: Full systems migration completed in 90 days post-acquisition.
• Operational Goal: Supporting a planned 25% specialty network expansion in 2026.

Strategic M&A targets for continued market consolidation

Market consolidation is a core partnership strategy, exemplified by the acquisition of H&E Equipment Services, which closed in June 2025. This was described as the largest acquisition in the industry's history. The integration is expected to yield substantial financial benefits.

The H&E acquisition expanded Herc Holdings' footprint from 451 locations to 612 locations across North America, giving it a leading presence in 11 of the top 20 U.S. rental markets. The combined entity has a fleet with an original equipment cost exceeding $9.6 billion. Management projected $300 million in incremental EBITDA from this deal, split between $175 million in revenue synergies and $125 million in cost synergies. Approximately half of the cost synergies were anticipated by the end of 2025.

The company's leverage ratio target is to reach 2-3x by the end of 2027, balancing EBITDA growth with debt reduction efforts. Local accounts represented 52% of rental revenue in Q3 2025 on a pro forma basis. Finance: draft 13-week cash view by Friday.

Herc Holdings Inc. (HRI) - Canvas Business Model: Key Activities

You're looking at the core engine room of Herc Holdings Inc. as of late 2025-the day-to-day execution that turns assets into revenue. This is where the rubber meets the road, especially after a massive integration.

Managing and optimizing the $9.9 billion rental fleet (OEC).

Fleet management is about maximizing the return on every dollar tied up in iron. As of June 30, 2025, the total fleet stood at approximately $9.9 billion at Original Equipment Cost (OEC). By the end of the third quarter, September 30, 2025, the equipment rental portfolio was valued at $9.6 billion based on OEC. This difference reflects active management, specifically the sale of acquisition fleet to improve mix and utilization.

Optimization involves disciplined capital deployment and rightsizing the fleet. For the nine months ended September 30, 2025, net rental equipment capital expenditures were $529 million. To manage the asset base, equipment disposals in Q3 2025 generated proceeds of approximately 41% of OEC. This disposal activity nearly doubled compared to the prior year on an OEC basis. Dollar utilization for the third quarter was 39.9%, down from 42.2% in the prior-year period.

Here's a look at how the fleet composition breaks down by OEC as of Q3 2025:

The company is actively shifting capital allocation. Gross capital expenditures for the full year 2025 are expected to be between $900 million and $1.1 billion.

Executing the complex integration of H&E Equipment Services.

The acquisition of H&E Equipment Services was a massive undertaking, closing on June 2, 2025. The key activity here was rapid systems unification. Management highlighted the completion of a complex systems migration in just 90 days. This unified the acquired branches onto Herc Holdings' network, including ERP, pricing, CRM, logistics, BI, HCM, and the ProControl customer platform.

The financial impact of this integration is clear in the transaction costs. For the third quarter of 2025, adjusted net income included $38 million of transaction costs related to the H&E acquisition. The company is focused on realizing synergy targets, with the leverage ratio at 3.8 times as of Q3 2025, aiming to return to the 2 to 3 times range by year-end 2027, driven by those synergies.

Maintaining and servicing equipment across 612 branches.

The physical footprint is central to service delivery. As of September 30, 2025, Herc Rentals operated 612 company-operated branches across the United States and Canada. Following the H&E acquisition, the combined entity reached 613 locations. This scale supports the customer base, which is segmented as follows for the nine months ended September 30, 2025:

• Contractors: 41% of revenue
• Industrial clients: 23% of revenue
• Infrastructure and government: 16% of revenue
• Commercial facilities: 14% of revenue

Servicing the fleet directly impacts operating costs. Direct operating expenses for Q3 2025 were $467 million, representing 41.6% of equipment rental revenue. Depreciation of rental equipment rose 41% to $246 million in Q3 2025, driven by the higher year-over-year average fleet size post-acquisition.

Driving cross-selling of specialty products (ProSolutions®).

Cross-selling specialty gear is a key revenue synergy target with the H&E integration. The ProSolutions® offering is a defined set of solutions beyond general rental.

The ProSolutions® portfolio includes:

• Power generation
• Climate control
• Remediation and restoration
• Pumps
• Trench shoring equipment

The strategy involves repurposing general rental branches into ProSolutions facilities to support specialty equipment capacity for the 160 plus acquired locations. Management is over-indexing gross CapEx toward specialty equipment with a long-term goal of increasing this category's percentage of the overall fleet composition. Specialty performance was strong, supporting the Q3 2025 equipment rental revenue growth of 30% year-over-year.

Finance: review Q4 2025 synergy realization against integration cost run-rate by end of January.

Herc Holdings Inc. (HRI) - Canvas Business Model: Key Resources

You're looking at the core assets Herc Holdings Inc. (HRI) relies on to run its business, the stuff that makes the whole operation tick. These aren't abstract concepts; they are tangible, measurable things that drive revenue and market position. Honestly, the scale of the physical assets is what sets the major players apart in this industry.

The foundation of Herc Holdings Inc.'s Key Resources is its massive, geographically spread fleet and its physical footprint across North America. These are the things that let them service customers from coast to coast, which is a huge competitive advantage in a fragmented market.

Here's a quick breakdown of the hard numbers for these primary resources as of late 2025, based on the latest available reports:

The fleet itself is diversified, covering the classic rental categories you'd expect, plus specialty gear. As of September 30, 2025, the equipment rental portfolio stood at a value of $9.6 billion based on original equipment cost (OEC). This portfolio includes everything from aerial and earthmoving gear to specialized items under the ProSolutions® offering, like power generation and climate control equipment.

The physical network is extensive, supporting that fleet deployment. Following the acquisition of H&E Equipment Services, Herc Rentals operates 612 company-operated branches across the United States and Canada. This scale helps them reach diverse end markets, focusing on major urban centers.

You can't run 612 branches and manage that fleet without people. Herc employs approximately 9,900 people across its operations. That headcount includes the skilled technicians needed to maintain complex machinery and the sales talent required to manage relationships with large industrial and construction clients.

Finally, the technology platform is a key intangible resource that helps manage the physical assets and customer interactions. Herc Rentals deploys proprietary customer-facing technology called ProControl by Herc Rentals™. This system is designed to be the new standard for fleet and account management.

The capabilities built into ProControl by Herc Rentals™ are significant for operational efficiency:

• Access real-time, account-specific information.
• Improve equipment utilization and rental efficiency through analytics.
• Features a user-friendly ecommerce solution for renting equipment anytime.
• Includes robust account management tools, allowing configuration of purchase orders.
• Incorporates a revolutionary fleet management platform with telematics for productivity.
• Offers geofencing tools to build virtual perimeters around job sites and receive alerts if equipment moves outside.

This technology helps job site managers and operators gain control over authorized use, track usage, and set equipment use schedules, sometimes using Bluetooth technology for remote access control even without Wi-Fi or cell service. Finance: draft 13-week cash view by Friday.

Herc Holdings Inc. (HRI) - Canvas Business Model: Value Propositions

Full-service equipment rental and comprehensive solutions means Herc Holdings Inc. offers a wide array of products and services to help customers work safely and effectively. The company provides its classic fleet alongside ProSolutions offering, which includes industry-specific, solutions-based services. For the nine months ended September 30, 2025, total revenues reached $3,167 million. In the third quarter of 2025, equipment rental revenue specifically was $1,122 million, contributing to total revenues of $1,304 million for that quarter. The 2024 pro forma total revenues were approximately $5.1 billion. You can see the scale of the business in the table below.

Specialty equipment and services for complex mega projects are a key focus, especially given the current operating environment. The company's fleet composition as of September 30, 2025, shows a dedicated portion for these areas. The ProSolutions offering covers areas like power generation, climate control, and trench shoring equipment. For Q3 2025, revenue diversification showed that contractors made up 41% of revenue, while infrastructure and government accounted for 16%.

Operational efficiency is supported by digital fleet management through ProControl™. Herc Holdings Inc. completed the full IT systems integration of its acquired branches onto its network, unifying systems including fleet management and ProControl, in approximately 90 days as of Q3 2025. This unified dashboard helps drive optimization. Dollar utilization, a key metric for efficiency, was reported at 39.9% in the third quarter of 2025, compared to 42.2% in the prior-year period. In the first quarter of 2025, dollar utilization was 37.6%.

Scale and availability are provided by a broad geographic footprint across North America. As of September 30, 2025, Herc Holdings Inc. operated 612 company-operated branches in the United States and Canada. The acquisition of H&E Equipment Services established a leading presence in 11 of the top 20 rental regions. Furthermore, the company expanded its physical presence by opening 17 greenfield locations during the first nine months of 2025. You can see the scale metrics here:

• Company-operated branches as of September 30, 2025: 612.
• Greenfield locations opened in the first nine months of 2025: 17.
• Fleet composition by OEC (9/30/2025): Aerial at 27%, Material Handling at 22%, Specialty Equipment at 17%, and Earthmoving at 13%.

Herc Holdings Inc. (HRI) - Canvas Business Model: Customer Relationships

You're looking at how Herc Holdings Inc. (HRI) structures its interactions with its diverse customer base as of late 2025, a year marked by the integration of H&E Equipment Services and a bifurcated market environment.

Dedicated National Account teams for large-scale customers are clearly a pillar of strength for Herc Holdings Inc. (HRI). The company explicitly noted that its national accounts business continues to benefit from robust project activity, which drove growth in the first quarter of 2025. This focus on major, often federally or privately funded, construction projects-like LNG facilities, data centers, and semiconductor plants-is a key relationship strategy. The CEO mentioned capturing an outsized share of these national account mega projects in 2024, which provided resilience against local market softness. This relationship strategy is supported by the sheer scale of the operation, with approximately 9,900 employees supporting customers across 612 company-operated branches in the United States and Canada as of September 30, 2025.

The service delivery model is dual-pronged, balancing national scale with local presence. While national accounts are a focus, the local service provided by branch personnel remains critical for the majority of the business volume.

The table above shows the revenue split as of March 31, 2025, illustrating that local accounts still represent the majority of the business, even as national accounts provide strong momentum. The company is targeting a shift toward a 60% local / 40% national mix over the long term.

Digital self-service and data access through ProControl™ represents the technological backbone connecting the sales force and the customer. Following the acquisition of H&E Equipment Services, Herc Holdings Inc. (HRI) achieved a major milestone by completing the full IT integration in the third quarter of 2025. This meant migrating all acquired branches onto Herc's network, which includes the customer-facing platform, ProControl by Herc Rentals™. This unified dashboard spans ERP, fleet management, pricing, CRM, logistics, and business intelligence. ProControl™ itself is described as using advanced technology to power a feature-rich website and mobile app, offering e-commerce solutions and robust account management tools, including telematics for fleet productivity and analytics.

For long-term, contractual relationships for major infrastructure work, the national account focus is the direct manifestation. The strength in this segment is tied to ongoing, multi-year projects. The company's total fleet value at original equipment cost (OEC) stood at $9,600 million as of September 30, 2025, indicating the substantial asset base available to service these large, often contractual, commitments. The success in securing this business is attributed to leveraging the strength of tenured customer relationships, which helped deliver record results in 2024.

• The company completed the sale of its Cinelease studio entertainment business on July 31, 2025, for initial cash consideration of $100 million.
• Net debt was $8.2 billion with a net leverage of 3.8x as of September 30, 2025.
• The company declared a quarterly dividend of $0.70 per share in Q3 2025.

Finance: review the Q4 2025 pipeline for national account contract renewals by January 15, 2026.

Herc Holdings Inc. (HRI) - Canvas Business Model: Channels

You're looking at how Herc Holdings Inc. gets its equipment and services into the hands of its customers across North America. It's a mix of boots-on-the-ground presence and modern digital tools, which is key given the scale they've achieved after the H&E Equipment Services acquisition.

The physical footprint is substantial. As of September 30, 2025, Herc Holdings Inc. operated 612 company-operated branches across the United States and Canada, a number that briefly reached 622 locations as of October 2025 following the integration of H&E. This physical network supports their rental and service offerings directly where the work is happening. To staff this, they employed approximately 9,900 people as of late 2025, though another report from October 2025 cited approximately 10,200 employees.

Direct engagement with major clients is handled by a dedicated direct sales force. This force targets two primary customer groups, which dictates a lot of their strategy. For instance, as of the first quarter of 2025, the revenue split showed that Local Accounts accounted for 53% of revenue, while National Accounts made up 47%. The company is actively working toward a long-term target mix of 60% local and 40% national revenue.

Digital channels are becoming increasingly integrated. The company completed a major IT integration in the third quarter of 2025, unifying operations onto their customer-facing platform, ProControl by Herc Rentals. This platform now serves as the single dashboard for key functions, including:

• Fleet management.
• Pricing execution.
• Customer Relationship Management (CRM).
• Logistics coordination.

When it comes to moving older assets, used equipment sales are a distinct channel, often utilized to rightsize the fleet after acquisitions. For the nine months ending September 30, 2025, sales of rental equipment added $147 million in revenue. However, this channel can pressure profitability; the margin on sales of rental equipment for the nine months of 2025 was 11%, down from 19% in the prior-year period. The use of the lower margin auction channel specifically contributed to this margin compression as they worked to rightsize the acquired fleet.

Here's a quick look at the key operational and financial metrics tied to these channels as of late 2025:

The focus on the National Account segment, driven by mega-projects, is a clear channel priority, even as the local account business faces headwinds from high interest rates. Finance: draft 13-week cash view by Friday.

Herc Holdings Inc. (HRI) - Canvas Business Model: Customer Segments

You're looking at how Herc Holdings Inc. (HRI) segments its customer base as of late 2025, which is crucial for understanding where the revenue actually comes from, especially after the big H&E Equipment Services acquisition.

Herc Holdings Inc. (HRI) explicitly structures its customer base to balance large, long-term national projects with consistent local demand. As of the second quarter of 2025, the company reported a balanced approach between local and national revenue streams, with 53% of revenue coming from local sources and 47% from national sources, though the long-term target is a 60% local / 40% national mix.

The most granular breakdown of revenue by end-market, based on Q2 2025 figures, shows the following distribution:

The prompt's outline aligns closely with the reported data, particularly for the major categories. For instance, the 53% figure for Local and Regional Contractors is supported by the reported local revenue stream percentage.

Here's a closer look at the key segments based on the structure you provided:

• Local and Regional Contractors: This segment still accounts for the majority of the total rental revenue, reported at 53% as of Q1 2025, though this area faced pressure in early 2025 due to the high-interest-rate environment.
• Industrial Clients: Representing 25% of revenue in Q2 2025, this segment benefits from robust industrial spending, with over $530 billion forecasted for 2025.
• Infrastructure and Government projects: This accounted for 17% of revenue in Q2 2025, benefiting from strong momentum in federal and privately funded mega projects.
• Large National Accounts: This group is the primary driver of the national revenue stream (47% of total revenue as of Q2 2025) and is supported by large-scale infrastructure and industrial projects.

The national account business showed robust momentum throughout 2024 and into 2025, driven by mega projects like LNG facilities, data centers, and semiconductor plants. The company is focused on scaling to support these national demands, with a reported approximately 40% year-over-year increase in branch locations by Q3 2025, adding density in key regions. If onboarding takes 14+ days, churn risk rises.

Finance: draft 13-week cash view by Friday.

Herc Holdings Inc. (HRI) - Canvas Business Model: Cost Structure

You're looking at the major drains on Herc Holdings Inc.'s cash flow and profitability as of late 2025, heavily influenced by the recent H&E Equipment Services acquisition.

High capital expenditures for fleet replacement is a primary cost driver. Herc Holdings Inc. is still executing on its fleet investment plan, reaffirming gross capital expenditures guidance for 2025.

The projected gross capital expenditures for the full year 2025 are between $900 million and $1.1 billion. This investment is necessary to grow and refresh the combined fleet.

The company's balance sheet reflects significant interest expense on $8.2 billion net debt as of September 30, 2025. This debt load was substantially increased to fund the H&E acquisition, which involved completing financing of $4.4 billion of new debt at a weighted average interest rate of 6.8% in Q2 2025.

Direct operating expenses (fleet maintenance, logistics, labor) have been elevated due to the acquisition integration phase. Operating expenses as a percent of equipment rental revenue were higher preceding the full impact of cost synergies and IT integration. This reflects acquisition-related redundancies and lower fixed cost absorption from moderation in certain local markets.

Depreciation of rental equipment is also a major cost component, increasing due to the larger fleet size post-acquisition. For the third quarter of 2025, depreciation of rental equipment increased 41% to $246 million. For the nine months ended September 30, 2025, non-rental depreciation and amortization increased 32% to $78 million, primarily due to amortization of intangible assets related to the H&E acquisition.

Here's a look at the Direct Operating Expenses for recent periods in 2025:

The company is actively managing these costs while pursuing the targeted savings from the merger. Herc Holdings Inc. expects to achieve 50% of its $125,000,000 EBITDA run rate cost synergy target by year-end 2025. The full cost synergy target is $125 million in EBITDA run rate.

These integration and restructuring costs are substantial and are being tracked alongside the synergy realization. For instance, the net loss in the second quarter of 2025 included $73 million of transaction costs primarily related to the H&E acquisition. The third quarter of 2025 included $38 million of transaction costs.

The cost structure is also impacted by selling, general and administrative expenses (SG&A), which for the third quarter of 2025 were $411 million, or 15.0% of equipment rental revenue. This included an increase related to stock-based compensation granted to certain H&E employees as part of merger agreements, partially offset by initial cost synergies.

• Gross fleet CapEx guidance for 2025: $900 million to $1.1 billion.
• Net debt as of September 30, 2025: $8.2 billion.
• Targeted full cost synergies: $125,000,000 EBITDA run rate.
• Targeted synergy achievement by year-end 2025: 50% of the cost synergy target.
• Q2 2025 transaction costs: $73 million.
• Q3 2025 transaction costs: $38 million.

Finance: review the Q4 2025 projected interest expense against the $8.2 billion debt load by next week.

Herc Holdings Inc. (HRI) - Canvas Business Model: Revenue Streams

You're looking at how Herc Holdings Inc. actually brings in the money, which is key to understanding its valuation, especially given the recent acquisition integration. The business model is heavily weighted toward the core rental activity, but the other streams provide important cash flow and fleet management benefits.

Core Equipment Rental Revenue is the engine here. For fiscal year 2025, Herc Holdings Inc. is projecting equipment rental revenue to land in the range of \$3.7 billion to \$3.9 billion, not including the Cinelease studio entertainment and lighting and grip equipment rental business. To give you a sense of the recent run rate, the total revenue for the trailing twelve months (TTM) as of late 2025 was reported at \$3.87 Billion USD. Looking at the third quarter of 2025 specifically, equipment rental revenue hit \$1,122 million, which was a 30% increase year-over-year for that period.

The composition of revenue streams is dynamic, especially following major integration efforts. Here's a look at some key components based on the nine months ended September 30, 2025, compared to the prior year:

Sales of used rental equipment (fleet rotation) is a crucial, though sometimes lower-margin, component. It helps manage fleet age and capital deployment. For the nine months ended September 30, 2025, the proceeds from the disposal of rental equipment totaled \$306 million. This compares to \$198 million in proceeds from disposal in the same nine-month period of 2024. Honestly, this activity is often tied to fleet optimization; for instance, the margin on sales of rental equipment was 18% for the nine months ended September 30, 2025, down from 27% in the prior-year period, partly due to selling acquired fleet inventory through lower-margin channels to rightsize the combined fleet.

Re-rent revenue and specialized ProSolutions® fees represent the higher-value, often stickier, parts of the service offering. While specific dollar amounts for re-rent revenue aren't cleanly separated in the latest guidance, the focus on specialty solutions is clear. Herc Holdings Inc. highlighted strength in its specialty products and solutions business, which helps buffer against moderation in interest-rate sensitive commercial sectors. The company's technology platform, ProControl by Herc RentalsTM, supports the delivery of these specialized services.

Finally, you have the various ancillary fees that layer on top of the base rental rate. These are the necessary add-ons that ensure operational coverage and cost recovery. You should expect to see revenue generated from:

• Delivery charges for moving equipment to and from job sites.
• Damage waiver fees, which transfer some risk to the customer.
• Fuel surcharges, adjusting for volatile energy costs.

These fees, while smaller individually, contribute to the overall margin profile of the rental transaction. Finance: draft 13-week cash view by Friday.