# EDGAR Filing Document

**Accession Number:** 0001364479
**File Stem:** 0001364479-25-000040
**Filing Date:** 2025-7
**Character Count:** 174517
**Document Hash:** ae435e9cff201c18779ebc92e0b0107f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001364479-25-000040.hdr.sgml**: 20250729

**ACCESSION NUMBER**: 0001364479-25-000040

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 84

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250729

**DATE AS OF CHANGE**: 20250729

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** HERC HOLDINGS INC
- **CENTRAL INDEX KEY:** 0001364479
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-MISCELLANEOUS EQUIPMENT RENTAL & LEASING [7350]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 203530539
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-33139
- **FILM NUMBER:** 251157457

**BUSINESS ADDRESS:**
- **STREET 1:** 27500 RIVERVIEW CENTER BLVD
- **CITY:** BONITA SPRINGS
- **STATE:** FL
- **ZIP:** 34134
- **BUSINESS PHONE:** (239) 301-1000

**MAIL ADDRESS:**
- **STREET 1:** 27500 RIVERVIEW CENTER BLVD
- **CITY:** BONITA SPRINGS
- **STATE:** FL
- **ZIP:** 34134

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** HERTZ GLOBAL HOLDINGS INC
- **DATE OF NAME CHANGE:** 20060531

?xml version='1.0' encoding='ASCII'? hri-20250630

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

_______________________________________________________________________________

**FORM 10-Q** 

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended June 30, 2025**

---

| | |
|:---|:---|
| **OR** | **OR** |
| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

**Commission File Number 001-33139** 

**HERC HOLDINGS INC.** 

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **20-3530539** |
| (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer<br>Identification Number) |

---

**27500 Riverview Center Blvd.** 

**Bonita Springs, Florida 34134** 

**(239) 301-1000** 

(Address, including Zip Code, and telephone number,

including area code, of registrant's principal executive offices)

**Not Applicable**

(Former name, former address and former fiscal year,

if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
| Common Stock, par value $0.01 per share | HRI | New York Stock Exchange |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☒ | Smaller reporting company | ☐ |
| Accelerated filer | ☐ | Emerging growth company | ☐ |
| Non-accelerated filer | ☐ | | |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 25, 2025, there were 33,236,566 shares of the registrant's common stock, $0.01 par value, outstanding.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| | | **Page** |
| <u>[Cautionary Note Regarding Forward-Looking Statements](#i2e209a5a0c394877909b301773e21126_10)</u> | <u>[Cautionary Note Regarding Forward-Looking Statements](#i2e209a5a0c394877909b301773e21126_10)</u> | <u>[1](#i2e209a5a0c394877909b301773e21126_10)</u> |
| **<u>[PART I. FINANCIAL INFORMATION](#i2e209a5a0c394877909b301773e21126_13)</u>** | **<u>[PART I. FINANCIAL INFORMATION](#i2e209a5a0c394877909b301773e21126_13)</u>** |  |
| &nbsp;&nbsp;<u>[ITEM 1.](#i2e209a5a0c394877909b301773e21126_16)</u> | <u>[Financial Statements](#i2e209a5a0c394877909b301773e21126_16)</u> | <u>[2](#i2e209a5a0c394877909b301773e21126_13)</u> |
|  | &nbsp;&nbsp;&nbsp;<u>[Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024](#i2e209a5a0c394877909b301773e21126_19)</u> | <u>[2](#i2e209a5a0c394877909b301773e21126_19)</u> |
|  | &nbsp;&nbsp;&nbsp;<u>[Condensed Consolidated Statements of Operations for the Three and Six Months Ended](#i2e209a5a0c394877909b301773e21126_22)</u><br><u>[June 30, 2025 and 2024](#i2e209a5a0c394877909b301773e21126_22)</u> | <u>[3](#i2e209a5a0c394877909b301773e21126_22)</u> |
|  | &nbsp;&nbsp;&nbsp;<u>[Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended](#i2e209a5a0c394877909b301773e21126_25)</u><br><u>[June 30, 2025 and 2024](#i2e209a5a0c394877909b301773e21126_25)</u> | <u>[4](#i2e209a5a0c394877909b301773e21126_25)</u> |
|  | &nbsp;&nbsp;&nbsp;<u>[Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended](#i2e209a5a0c394877909b301773e21126_28)</u><br><u>[June 30, 2025 and 2024](#i2e209a5a0c394877909b301773e21126_28)</u> | <u>[5](#i2e209a5a0c394877909b301773e21126_28)</u> |
|  | &nbsp;&nbsp;&nbsp;<u>[Condensed Consolidated Statements of Cash Flows for the Six Months Ended](#i2e209a5a0c394877909b301773e21126_31)</u><br><u>[June 30, 2025 and 2024](#i2e209a5a0c394877909b301773e21126_31)</u> | <u>[6](#i2e209a5a0c394877909b301773e21126_31)</u> |
|  | <u>[Notes to Condensed Consolidated Financial Statements](#i2e209a5a0c394877909b301773e21126_34)</u> | <u>[8](#i2e209a5a0c394877909b301773e21126_34)</u> |
| &nbsp;&nbsp;<u>[ITEM 2.](#i2e209a5a0c394877909b301773e21126_85)</u> | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i2e209a5a0c394877909b301773e21126_85)</u> | <u>[29](#i2e209a5a0c394877909b301773e21126_85)</u> |
| &nbsp;&nbsp;<u>[ITEM 3.](#i2e209a5a0c394877909b301773e21126_100)</u> | <u>[Quantitative and Qualitative Disclosures About Market Risk](#i2e209a5a0c394877909b301773e21126_100)</u> | <u>[36](#i2e209a5a0c394877909b301773e21126_100)</u> |
| &nbsp;&nbsp;<u>[ITEM 4.](#i2e209a5a0c394877909b301773e21126_103)</u> | <u>[Controls and Procedures](#i2e209a5a0c394877909b301773e21126_103)</u> | <u>[36](#i2e209a5a0c394877909b301773e21126_103)</u> |
| **<u>[PART II. OTHER INFORMATION](#i2e209a5a0c394877909b301773e21126_106)</u>** | **<u>[PART II. OTHER INFORMATION](#i2e209a5a0c394877909b301773e21126_106)</u>** |  |
| &nbsp;&nbsp;<u>[ITEM 1.](#i2e209a5a0c394877909b301773e21126_109)</u> | <u>[Legal Proceedings](#i2e209a5a0c394877909b301773e21126_109)</u> | <u>[38](#i2e209a5a0c394877909b301773e21126_109)</u> |
| &nbsp;&nbsp;<u>[ITEM 1A.](#i2e209a5a0c394877909b301773e21126_112)</u> | <u>[Risk Factors](#i2e209a5a0c394877909b301773e21126_112)</u> | <u>[38](#i2e209a5a0c394877909b301773e21126_112)</u> |
| &nbsp;&nbsp;<u>[ITEM 2.](#i2e209a5a0c394877909b301773e21126_115)</u> | <u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i2e209a5a0c394877909b301773e21126_115)</u> | <u>[39](#i2e209a5a0c394877909b301773e21126_115)</u> |
| &nbsp;&nbsp;<u>[ITEM 5.](#i2e209a5a0c394877909b301773e21126_118)</u> | <u>[Other Information](#i2e209a5a0c394877909b301773e21126_118)</u> | <u>[39](#i2e209a5a0c394877909b301773e21126_118)</u> |
| &nbsp;&nbsp;<u>[ITEM 6.](#i2e209a5a0c394877909b301773e21126_121)</u> | <u>[Exhibits](#i2e209a5a0c394877909b301773e21126_121)</u> | <u>[40](#i2e209a5a0c394877909b301773e21126_121)</u> |
| **<u>[SIGNATURE](#i2e209a5a0c394877909b301773e21126_124)</u>** | **<u>[SIGNATURE](#i2e209a5a0c394877909b301773e21126_124)</u>** | <u>[42](#i2e209a5a0c394877909b301773e21126_124)</u> |

---

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> 

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**

*This Quarterly Report on Form 10-Q for the period ended June 30, 2025 (this "Report") includes "forward-looking statements", within the meaning of Section 21E of the Securities Exchange Act, as amended, and the Private Securities Litigation Reform Act of 1995. Forward looking statements are generally identified by the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts," "looks," and future or conditional verbs, such as "will," "should," "could" or "may," as well as variations of such words or similar expressions. All forward-looking statements are based upon our current expectations and various assumptions and apply only as of the date of this Report. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will be achieved. You should not place undue reliance on the forward-looking statements.*

*Factors that could cause actual results to differ materially from those projected include, but are not limited to, the following:*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• the cyclical nature of our industry and our dependence on the levels of capital investment and maintenance expenditures by our customers;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• the competitiveness of our industry, including the potential downward pricing pressures or the inability to increase prices;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• our dependence on relationships with key suppliers;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• our heavy reliance on communication networks, centralized information technology systems and third party technology and services and our ability to maintain, upgrade or replace our information technology systems;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• our ability to respond adequately to changes in technology and customer demands;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• our ability to attract and retain key management, sales and trades talent;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• our rental fleet is subject to residual value risk upon disposition;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• the impact of climate change and the legal and regulatory responses to such change;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• our ability to execute our strategy to grow through strategic transactions;* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• our ability to integrate H&E Equipment Services, Inc. into our business and realize all the anticipated benefits of the transaction; and* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• our significant indebtedness.*

*There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those suggested by our forward-looking statements, including those set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 under Item 1A "Risk Factors," in Part II, Item 1A of this Report, and in our other filings with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by such cautionary statements. We undertake no obligation to update or revise forward-looking statements that have been made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.*

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**PART I—FINANCIAL INFORMATION**

**ITEM l.&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL STATEMENTS**

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED BALANCE SHEETS** 

**(In millions, except par value)**

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| **ASSETS** | **(Unaudited)** | |
| **Current assets:** | | |
| &nbsp;&nbsp;Cash and cash equivalents | $53 | $83 |
| &nbsp;&nbsp;Receivables, net of allowances of $17 and $22, respectively | 778 | 589 |
| &nbsp;&nbsp;Prepaid expenses | 63 | 47 |
| &nbsp;&nbsp;Other current assets | 26 | 40 |
| &nbsp;&nbsp;Assets held for sale | 23 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total current assets** | **943** | **776** |
| Rental equipment, net | 6015 | 4225 |
| Property and equipment, net | 865 | 554 |
| Right-of-use lease assets | 1475 | 852 |
| Intangible assets, net | 1622 | 572 |
| Goodwill | 2901 | 670 |
| Other long-term assets | 17 | 8 |
| Assets held for sale | 180 | 220 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $**14018** | $**7877** |
| **LIABILITIES AND EQUITY** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;Current maturities of long-term debt and financing obligations | $28 | $21 |
| &nbsp;&nbsp;Current maturities of operating lease liabilities | 55 | 39 |
| &nbsp;&nbsp;Accounts payable | 325 | 248 |
| &nbsp;&nbsp;Accrued liabilities | 391 | 239 |
| &nbsp;&nbsp;Liabilities held for sale | 19 | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total current liabilities** | **818** | **562** |
| Long-term debt, net | 8251 | 4069 |
| Financing obligations, net | 98 | 101 |
| Operating lease liabilities | 1454 | 842 |
| Deferred tax liabilities | 1377 | 800 |
| Other long-term liabilities | 53 | 47 |
| Liabilities held for sale | 56 | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | **12107** | **6481** |
| Commitments and contingencies (Note 13) |  |  |
| **Equity:** |  |  |
| &nbsp;&nbsp;Preferred stock, $0.01 par value, 13.3 shares authorized, no shares issued and outstanding |  |  |
| &nbsp;&nbsp;Common stock, $0.01 par value, 133.3 shares authorized, 38.1 and 33.3 shares issued and 33.2 and 28.4 shares outstanding |  |  |
| &nbsp;&nbsp;Additional paid-in capital | 2423 | 1832 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 540 | 633 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (125) | (142) |
| &nbsp;&nbsp;Treasury stock, at cost, 4.9 shares and 4.9 shares | (927) | (927) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total equity** | **1911** | **1396** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and equity** | $**14018** | $**7877** |

---

The accompanying notes are an integral part of these financial statements.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**Unaudited**

**(In millions, except per share data)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Revenues:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Equipment rental | $870 | $765 | $1609 | $1484 |
| &nbsp;&nbsp;&nbsp;Sales of rental equipment | 106 | 65 | 211 | 134 |
| &nbsp;&nbsp;&nbsp;Sales of new equipment, parts and supplies | 17 | 10 | 28 | 19 |
| &nbsp;&nbsp;&nbsp;Service and other revenue | 9 | 8 | 15 | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total revenues** | **1002** | **848** | **1863** | **1652** |
| **Expenses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Direct operating | 379 | 326 | 706 | 633 |
| &nbsp;&nbsp;&nbsp;Depreciation of rental equipment | 195 | 165 | 367 | 325 |
| &nbsp;&nbsp;&nbsp;Cost of sales of rental equipment | 86 | 45 | 162 | 91 |
| &nbsp;&nbsp;&nbsp;Cost of sales of new equipment, parts and supplies | 10 | 6 | 18 | 12 |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative | 127 | 117 | 245 | 229 |
| &nbsp;&nbsp;&nbsp;Transaction expenses | 73 | 3 | 147 | 6 |
| &nbsp;&nbsp;&nbsp;Non-rental depreciation and amortization | 45 | 30 | 78 | 59 |
| &nbsp;&nbsp;&nbsp;Interest expense, net | 86 | 63 | 148 | 124 |
| &nbsp;&nbsp;&nbsp;Loss on assets held for sale | 49 |  | 49 |  |
| &nbsp;&nbsp;&nbsp;Other expense (income), net | (2) |  | (3) | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total expenses** | **1048** | **755** | **1917** | **1478** |
| **Income (loss) before income taxes** | **(46)** | **93** | **(54)** | **174** |
| &nbsp;&nbsp;Income tax benefit (provision) | 11 | (23) | 1 | (39) |
| **Net income (loss)** | $**(35)** | $**70** | $**(53)** | $**135** |
| **Weighted average shares outstanding:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 30.0 | 28.4 | 29.2 | 28.3 |
| &nbsp;&nbsp;&nbsp;Diluted | 30.0 | 28.5 | 29.2 | 28.4 |
| **Earnings (loss) per share:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $(1.17) | $2.46 | $(1.82) | $4.77 |
| &nbsp;&nbsp;&nbsp;Diluted | $(1.17) | $2.46 | $(1.82) | $4.75 |

---

The accompanying notes are an integral part of these financial statements.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

**Unaudited**

**(In millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;&nbsp;**Three Months Ended June 30,** | &nbsp;&nbsp;&nbsp;&nbsp;**Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | &nbsp;&nbsp;&nbsp;**2025** | **2024** | **2025** | **2024** |
| **Net income (loss)** | $**(35)** | $**70** | $**(53)** | $**135** |
| Other comprehensive income (loss): |  |  |  |  |
| Foreign currency translation adjustments | 17 | (3) | 17 | (9) |
| &nbsp;&nbsp;**Total comprehensive income (loss)** | $**(18)** | $**67** | $**(36)** | $**126** |

---

The accompanying notes are an integral part of these financial statements.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**

**Unaudited**

**(In millions)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Additional<br>Paid-In Capital** | **Retained Earnings** | **Accumulated<br>Other<br>Comprehensive<br>Income (Loss)** | **Treasury Stock** | **Total<br>Equity** |
| | **Shares** | **Amount** | **Additional<br>Paid-In Capital** | **Retained Earnings** | **Accumulated<br>Other<br>Comprehensive<br>Income (Loss)** | **Treasury Stock** | **Total<br>Equity** |
| **Balance at December 31, 2024** | **28.4** | $**—** | $**1832** | $**633** | $**(142)** | $**(927)** | $**1396** |
| &nbsp;&nbsp;Net loss |  |  |  | (18) |  |  | (18) |
| &nbsp;&nbsp;Stock-based compensation charges |  |  | 6 |  |  |  | 6 |
| &nbsp;&nbsp;Dividends declared, $0.70 per share |  |  |  | (20) |  |  | (20) |
| &nbsp;&nbsp;Net settlement on vesting of equity awards | 0.1 |  | (7) |  |  |  | (7) |
| &nbsp;&nbsp;Employee stock purchase plan |  |  | 1 |  |  |  | 1 |
| **Balance at March 31, 2025** | **28.5** | **—** | **1832** | **595** | **(142)** | **(927)** | **1358** |
| &nbsp;&nbsp;Net loss |  |  |  | (35) |  |  | (35) |
| &nbsp;&nbsp;Other comprehensive loss |  |  |  |  | 17 |  | 17 |
| &nbsp;&nbsp;Stock-based compensation charges |  |  | 6 |  |  |  | 6 |
| &nbsp;&nbsp;Dividends declared, $0.70 per share |  |  |  | (20) |  |  | (20) |
| &nbsp;&nbsp;Employee stock purchase plan |  |  | 1 |  |  |  | 1 |
| &nbsp;&nbsp;Issuance of common stock for H&E acquisition | 4.7 |  | 584 |  |  |  | 584 |
| **Balance at June 30, 2025** | **33.2** | $**—** | $**2423** | $**540** | $**(125)** | $**(927)** | $**1911** |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Additional<br>Paid-In Capital** | **Retained Earnings** | **Accumulated<br>Other<br>Comprehensive<br>Income (Loss)** | **Treasury Stock** | **Total<br>Equity** |
| | **Shares** | **Amount** | **Additional<br>Paid-In Capital** | **Retained Earnings** | **Accumulated<br>Other<br>Comprehensive<br>Income (Loss)** | **Treasury Stock** | **Total<br>Equity** |
| **Balance at December 31, 2023** | **28.2** | $**—** | $**1820** | $**498** | $**(118)** | $**(927)** | $**1273** |
| &nbsp;&nbsp;Net income |  |  |  | 65 |  |  | 65 |
| &nbsp;&nbsp;Other comprehensive loss |  |  |  |  | (6) |  | (6) |
| &nbsp;&nbsp;Stock-based compensation charges |  |  | 5 |  |  |  | 5 |
| &nbsp;&nbsp;Dividends declared, $0.665 per share |  |  |  | (19) |  |  | (19) |
| &nbsp;&nbsp;Net settlement on vesting of equity awards | 0.1 |  | (12) |  |  |  | (12) |
| &nbsp;&nbsp;Employee stock purchase plan |  |  | 1 |  |  |  | 1 |
| &nbsp;&nbsp;Exercise of stock options |  |  | 1 |  |  |  | 1 |
| **Balance at March 31, 2024** | **28.3** | **—** | **1815** | **544** | **(124)** | **(927)** | **1308** |
| &nbsp;&nbsp;Net income |  |  |  | 70 |  |  | 70 |
| &nbsp;&nbsp;Other comprehensive loss |  |  |  |  | (3) |  | (3) |
| &nbsp;&nbsp;Stock-based compensation charges |  |  | 4 |  |  |  | 4 |
| &nbsp;&nbsp;Dividends declared, $0.665 per share |  |  |  | (19) |  |  | (19) |
| &nbsp;&nbsp;Employee stock purchase plan |  |  | 1 |  |  |  | 1 |
| &nbsp;&nbsp;Exercise of stock options | 0.1 |  | 1 |  |  |  | 1 |
| **Balance at June 30, 2024** | **28.4** | $**—** | $**1821** | $**595** | $**(127)** | $**(927)** | $**1362** |

---

The accompanying notes are an integral part of these financial statements.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**Unaudited**

**(In millions)**

---

| | | |
|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | $(53) | $135 |
| &nbsp;&nbsp;&nbsp;*Adjustments to reconcile net income (loss) to net cash provided by operating activities:* |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation of rental equipment | 367 | 325 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation of property and equipment | 47 | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangible assets | 31 | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred debt and financing obligations costs | 3 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation charges | 12 | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for receivables allowances | 31 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on assets held for sale | 49 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred taxes | (58) | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of rental equipment | (49) | (43) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 5 | 6 |
| &nbsp;&nbsp;*Changes in assets and liabilities, net of effects from acquisitions:* |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables | 3 | (22) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets | (14) | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (6) | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities and other long-term liabilities | 44 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by operating activities** | **412** | **558** |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Rental equipment expenditures | (421) | (468) |
| &nbsp;&nbsp;&nbsp;Proceeds from disposal of rental equipment | 183 | 125 |
| &nbsp;&nbsp;&nbsp;Non-rental capital expenditures | (80) | (71) |
| &nbsp;&nbsp;&nbsp;Proceeds from disposal of property and equipment | 9 | 4 |
| &nbsp;&nbsp;&nbsp;Acquisitions, net of cash acquired | (4251) | (290) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in investing activities** | **(4560)** | **(700)** |

---

The accompanying notes are an integral part of these financial statements.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)**

**Unaudited**

**(In millions)**

---

| | | |
|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of long-term debt | 3467 | 800 |
| &nbsp;&nbsp;&nbsp;Proceeds from revolving lines of credit and securitization | 3361 | 840 |
| &nbsp;&nbsp;&nbsp;Repayments on revolving lines of credit and securitization | (2645) | (1433) |
| &nbsp;&nbsp;&nbsp;Principal payments under finance lease and financing obligations | (10) | (10) |
| &nbsp;&nbsp;&nbsp;Payment of debt issuance costs | (9) | (9) |
| &nbsp;&nbsp;&nbsp;Dividends paid | (41) | (39) |
| &nbsp;&nbsp;&nbsp;Net settlement on vesting of equity awards | (7) | (12) |
| &nbsp;&nbsp;&nbsp;Proceeds from employee stock purchase plan | 2 | 2 |
| &nbsp;&nbsp;&nbsp;Proceeds from exercise of stock options |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by financing activities** | **4118** | **141** |
| Effect of foreign exchange rate changes on cash and cash equivalents |  |  |
| **Net change in cash and cash equivalents during the period** | **(30)** | **(1)** |
| Cash and cash equivalents at beginning of period | 83 | 71 |
| **Cash and cash equivalents at end of period** | $**53** | $**70** |
| **Supplemental disclosure of cash flow information:** |  |  |
| &nbsp;&nbsp;Cash paid for interest | $119 | $123 |
| &nbsp;&nbsp;Cash paid for income taxes, net | $17 | $9 |
| **Supplemental disclosure of non-cash investing activity:** |  |  |
| &nbsp;&nbsp;Purchases of rental equipment in accounts payable | $47 | $43 |
| &nbsp;&nbsp;Non-rental capital expenditures in accounts payable | $6 | $17 |
| &nbsp;&nbsp;Disposal of rental equipment in accounts receivable | $12 | $1 |
| **Supplemental disclosure of non-cash investing and financing activity:** |  |  |
| &nbsp;&nbsp;&nbsp;Issuance of common stock for H&E acquisition | $584 | $— |
| &nbsp;&nbsp;Equipment acquired through finance lease | $3 | $3 |

---

The accompanying notes are an integral part of these financial statements.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**Unaudited**

**Note 1—Organization and Description of Business** 

Herc Holdings Inc. ("we," "us," "our," "Herc Holdings," or "the Company") is one of the leading equipment rental suppliers with 622 locations in North America as of June 30, 2025. The Company conducts substantially all of its operations through subsidiaries, including Herc Rentals Inc. ("Herc"). With over 59 years of experience, the Company is a full-line equipment rental supplier offering a broad portfolio of equipment for rent. In addition to its principal business of equipment rental, the Company sells used equipment and contractor supplies such as construction consumables, tools, small equipment and safety supplies; provides repair, maintenance, equipment management services and safety training to certain of its customers; offers equipment re-rental services and provides on-site support to its customers; and provides ancillary services such as equipment transport, rental protection, cleaning, refueling and labor.

The Company's fleet includes aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, lighting, trench shoring, and studio and production equipment. The Company's equipment rental business is supported by ProSolutions®, its industry-specific solutions-based services, which includes power generation, climate control, remediation and restoration, and pumps, and its ProContractor professional grade tools.

**Note 2—Basis of Presentation and Significant Accounting Policies** 

***Basis of Presentation***

The Company prepares its condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In the opinion of management, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements, however, these condensed consolidated financial statements do not include all of the disclosures required for complete annual financial statements and, accordingly, certain information, footnotes and disclosures normally included in annual financial statements, prepared in accordance with U.S. GAAP, have been condensed or omitted in accordance with Securities and Exchange Commission ("SEC") rules and regulations. The Company believes that the disclosures made are adequate to make the information not misleading. Accordingly, the condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 13, 2025.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Actual results could differ materially from those estimates.

Significant estimates inherent in the preparation of the condensed consolidated financial statements include receivables allowances, depreciation of rental equipment, the recoverability of long-lived assets, useful lives and impairment of long-lived tangible and intangible assets including goodwill and trade name, valuation of acquired intangible assets, pension and postretirement benefits, valuation of stock-based compensation, reserves for litigation and other contingencies and accounting for income taxes, among others.

***Reclassifications***

Certain prior year amounts have been reclassified for consistency with current year presentation. These reclassifications had no effect on the previously reported net income, cash flows, or shareholder's equity.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

***Principles of Consolidation***

The condensed consolidated financial statements include the accounts of Herc Holdings and its wholly owned subsidiaries. In the event that the Company is a primary beneficiary of a variable interest entity, the assets, liabilities and results of operations of the variable interest entity are included in the Company's condensed consolidated financial statements. The Company accounts for investments in joint ventures using the equity method when it has significant influence but not control and is not the primary beneficiary. All significant intercompany transactions have been eliminated in consolidation.

***Recently Issued Accounting Pronouncements and Disclosure Rules***

<u>Not Yet Adopted</u>

*Improvements to Income Tax Disclosures*

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company will adopt this new disclosure guidance in accordance with the effective date.

*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 fiscal years beginning after December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2024-03 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

**Note 3—Revenue Recognition** 

The Company is principally engaged in the business of renting equipment. Ancillary to the Company's 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 approximately 93.5% and 93.6% of total revenue for the three and six months ended June 30, 2025, respectively, compared to 92.4% and 92.5% for the same period in 2024.

The Company's rental transactions are accounted for under Accounting Standards Codification ("ASC") Topic 842, *Leases* ("Topic 842"). The Company's 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.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

The following summarizes the applicable accounting guidance for the Company's revenues for the three and six months ended June 30, 2025 and 2024 (in millions):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |
| | **Topic 842** | **Topic 606** | **Total** | **Topic 842** | **Topic 606** | **Total** |
| **Revenues:** |  |  |  |  |  |  |
| Equipment rental | $777 | $— | $777 | $685 | $— | $685 |
| Other rental revenue: |  |  |  |  |  |  |
| &nbsp;&nbsp;Delivery and pick-up |  | 60 | 60 |  | 53 | 53 |
| &nbsp;&nbsp;&nbsp;Other | 33 |  | 33 | 27 |  | 27 |
| Total other rental revenues | 33 | 60 | 93 | 27 | 53 | 80 |
| &nbsp;&nbsp;**Total equipment rental** | **810** | **60** | **870** | **712** | **53** | **765** |
| Sales of rental equipment |  | 106 | 106 |  | 65 | 65 |
| Sales of new equipment, parts and supplies |  | 17 | 17 |  | 10 | 10 |
| Service and other revenues |  | 9 | 9 |  | 8 | 8 |
| &nbsp;&nbsp;**Total revenues** | $**810** | $**192** | $**1002** | $**712** | $**136** | $**848** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |
| | **Topic 842** | **Topic 606** | **Total** | **Topic 842** | **Topic 606** | **Total** |
| Revenues: |  |  |  |  |  |  |
| Equipment rental | $1443 | $— | $1443 | $1333 | $— | $1333 |
| Other rental revenue: |  |  |  |  |  |  |
| &nbsp;&nbsp;Delivery and pick-up |  | 108 | 108 |  | 98 | 98 |
| &nbsp;&nbsp;&nbsp;Other | 58 |  | 58 | 53 |  | 53 |
| Total other rental revenues | 58 | 108 | 166 | 53 | 98 | 151 |
| &nbsp;&nbsp;**Total equipment rental** | **1501** | **108** | **1609** | **1386** | **98** | **1484** |
| Sales of rental equipment |  | 211 | 211 |  | 134 | 134 |
| Sales of new equipment, parts and supplies |  | 28 | 28 |  | 19 | 19 |
| Service and other revenues |  | 15 | 15 |  | 15 | 15 |
| &nbsp;&nbsp;**Total revenues** | $**1501** | $**362** | $**1863** | $**1386** | $**266** | $**1652** |

---

<u>Topic 842 Revenues</u>

*Equipment Rental Revenue*

The Company offers a broad portfolio of equipment for rent on daily, weekly or monthly basis, with substantially all rental agreements cancellable upon the return of the equipment. Virtually all customer contracts can be canceled by the customer with no penalty by returning the equipment within one day; therefore, the Company does not allocate the transaction price between the different contract elements.

Equipment rental revenue includes revenue generated from renting equipment to customers and is recognized on a straight-line basis over the length of the rental contract. As part of this straight-line methodology, when the equipment is returned, the Company recognizes as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the equipment was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, the Company will have customers return equipment and be contractually required to pay more than the cumulative amount of revenue recognized to date under the straight-line methodology. Also included in equipment rental revenue is re-rent revenue in which the Company will rent

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

specific pieces of equipment from vendors and then re-rent that equipment to its customers. Provisions for discounts, rebates to customers and other adjustments are provided for in the period the related revenue is recorded.

*Other*

Other equipment rental revenue is primarily comprised of fees for the Company's rental protection program and environmental charges. Fees paid for the rental protection program allow customers to limit the risk of financial loss in the event the Company's equipment is damaged or lost. Fees for the rental protection program and environmental recovery fees are recognized on a straight-line basis over the length of the rental contract.

<u>Topic 606 Revenues</u>

*Delivery and Pick-up*

Delivery and pick-up revenue associated with renting equipment is recognized when the services are performed.

*Sales of Rental Equipment, New Equipment, Parts and Supplies*

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,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Sales of rental equipment | $106 | $65 | $211 | $134 |
| Sales of new equipment | 7 | 3 | 12 | 6 |
| Sales of parts and supplies | 10 | 7 | 16 | 13 |
| &nbsp;&nbsp;**Total** | $**123** | $**75** | $**239** | $**153** |

---

The Company recognizes revenue from the sale of rental equipment, new equipment, parts and supplies when control of the asset transfers to the customer, which is typically when the asset is picked up by or delivered to the customer and when significant risks and rewards of ownership have passed to the customer. Sales and other tax amounts collected from customers and remitted to government authorities are accounted for on a net basis and, therefore, excluded from revenue.

The Company routinely sells its used rental equipment in order to manage repair and maintenance costs, as well as the composition, age and size of its fleet. The Company disposes of used equipment through a variety of channels including retail sales to customers and other third parties, sales to wholesalers, brokered sales and auctions.

The Company also sells new equipment, parts and supplies. The types of new equipment that the Company sells vary by location and include a variety of ProContractor tools and supplies, small equipment (such as work lighting, generators, pumps, compaction equipment and power trowels), safety supplies and expendables.

Under Topic 606, the accounts receivable balance, prior to allowances for credit losses, for the sale of rental equipment, new equipment, parts and supplies, was approximately $29 million and $17 million as of June 30, 2025 and December 31, 2024, respectively.

*Service and Other Revenues*

Service and other revenues primarily include revenue earned from equipment management and similar services for rental customers which includes providing customer support functions such as dedicated in-plant operations, plant management services, equipment and safety training, and repair and maintenance services particularly to industrial customers who request such services.

The Company recognizes revenue for service and other revenues as the services are provided. Service and other revenues are typically invoiced together with a customer's rental amounts and, therefore, it is not practical for the Company to separate the accounts receivable amount related to services and other revenues that are accounted for under Topic 606; however, such amount is not considered material.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

*Receivables and Contract Assets and Liabilities*

Most of the Company's equipment rental revenue is accounted for under Topic 842. The customers that are responsible for the remaining equipment rental revenue that is accounted for under Topic 606 are generally the same customers that rent the Company's equipment. Concentration of credit risk with respect to the Company's accounts receivable is limited because a large number of geographically diverse customers makes up its customer base. The Company manages credit risk associated with its accounts receivable at the customer level through credit approvals, credit limits and other monitoring procedures. The Company maintains allowances for credit losses that reflect the Company's estimate of the amount of receivables that the Company will be unable to collect based on its historical write-off experience.

The Company does not have material contract assets or contract liabilities associated with customer contracts. The Company's contracts with customers do not generally result in material amounts billed to customers in excess of recognizable revenue. The Company did not recognize material revenue during the three and six months ended June 30, 2025 and 2024 that was included in the contract liability balance as of the beginning of each period.

*Performance Obligations*

Most of the Company's revenue recognized under Topic 606 is recognized at a point-in-time, rather than over time. Accordingly, in any particular period, the Company does not generally recognize a significant amount of revenue from performance obligations satisfied (or partially satisfied) in previous periods, and the amount of such revenue recognized during the three and six months ended June 30, 2025 and 2024 was not material. We also do not expect to recognize material revenue in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of June 30, 2025.

*Contract Estimates and Judgments*

The Company's revenues accounted for under Topic 606 generally do not require significant estimates or judgments, primarily for the following reasons:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The transaction price is generally fixed and stated on the Company's contracts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As noted above, the Company's contracts generally do not include multiple performance obligations, and accordingly do not generally require estimates of the standalone selling price for each performance obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company's revenues do not include material amounts of variable consideration; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Most of the Company's revenue is recognized as of a point-in-time and the timing of the satisfaction of the applicable performance obligations is readily determinable. As noted above, the revenue recognized under Topic 606 is generally recognized at the time of delivery to, or pick-up by, the customer.

The Company monitors and reviews its estimated standalone selling prices on a regular basis.

**Note 4—Rental Equipment** 

Rental equipment consists of the following (in millions):

---

| | | |
|:---|:---|:---|
| | **June 30, 2025** | **December 31, 2024** |
| Rental equipment | $8325 | $6423 |
| Less: Accumulated depreciation | (2310) | (2198) |
| &nbsp;&nbsp;**Rental equipment, net** | $**6015** | $**4225** |

---

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

**Note 5—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.

**2025 Business Combinations**

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 work platforms, earthmoving equipment, material handling equipment, 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 is expected to (i) add scale and density in key rental regions, particularly in several of the largest rental regions in North America; (ii) create cross-sell opportunities of specialty equipment to an expanded customer base and (iii) increase availability of aerial, material handling and earthmoving equipment for the Company's customers.

The Company acquired all of the outstanding common shares 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 billion including cash payment of $2.9 billion and the issuance of approximately 4.7 million of the Company's common shares to H&E's shareholders, valued at $584 million. Additionally, the Company paid cash to extinguish $1.4 billion of outstanding H&E debt that was not assumed as part of the acquisition. The acquisition was funded by issuance of new debt consisting of $2.8 billion in senior unsecured notes, 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. See Note 15, "Equity and Earnings (Loss) Per Share and Note 9, "Debt" for additional information on the equity issued and financing associated with the H&E acquisition, respectively.

The following table summarizes the purchase price allocation of the assets acquired and liabilities assumed (in millions):

---

| | |
|:---|:---|
| | **H&E** |
| Cash | $23 |
| Accounts receivable | 209 |
| Other current assets | 13 |
| Rental equipment | 1830 |
| Property and equipment | 286 |
| Right-of-use lease assets | 567 |
| Customer relationships intangible | 1070 |
| &nbsp;&nbsp;**Total identifiable assets acquired** | **3998** |
| Current liabilities | 172 |
| Operating lease liabilities | 567 |
| Finance lease liabilities | 7 |
| Deferred tax liabilities | 633 |
| &nbsp;&nbsp;**Net identifiable assets acquired** | **2619** |
| Goodwill | 2211 |
| &nbsp;&nbsp;**Net assets acquired** | $**4830** |

---

The acquired intangible assets in this acquisition were customer relationships that have an expected life of 10 years. The level of goodwill that resulted from the acquisition is primarily reflective of operational synergies the Company expects to achieve that are not associated with identifiable assets, the value of H&E's assembled workforce and new customer relationships expected to arise from the acquisition. The goodwill is not expected to be deductible for income tax purposes.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

Certain estimated fair values for the acquisition, including goodwill, intangible assets, right-of-use lease assets, lease liabilities and income taxes, are not yet finalized. The purchase price was preliminarily allocated based on information available at the acquisition date and is subject to change as we complete our analysis of the fair values at the date of the acquisition during the measurement period not to exceed one year as permitted under Topic 805.

The assets and liabilities for H&E were recorded as of June 2, 2025 and the results of operations have been included in the Company's consolidated results of operations since that date. Total revenues included in the condensed consolidated statement of operations since the acquisition date were $100 million. It is not practicable to reasonably estimate the amount of earnings of H&E since acquisition date, primarily due to our corporate structure and the allocation of corporate costs.

The Company has incurred $144 million of transaction expenses during the six months ended June 30, 2025, associated with the acquisition of H&E. Expenses incurred primarily consisted of 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 (as defined in Note 9, "Debt*"*) of $21 million and various other financial consulting and legal fees.

**2024 Business Combinations**

On July 16, 2024, the Company completed the acquisition of substantially all of the assets of Otay Mesa Sales ("Otay"). Otay was a full-service general equipment rental company comprised of approximately 135 employees and four locations serving construction and industrial customers throughout the metropolitan areas of San Diego, California and Phoenix and Yuma, Arizona. The aggregate consideration for the acquisition was approximately $273 million. The acquisition and related fees and expenses were funded through available cash and drawings on the senior secured asset-based revolving credit facility.

The following table summarizes the purchase price allocation of the assets acquired and liabilities assumed (in millions) since the acquisition date on July 16, 2024. The excess of consideration paid over the estimated fair value of the net identifiable assets acquired was initially recorded at $56 million, however, in accordance with Topic 805, the Company recorded a measurement period adjustment and increased goodwill by $11 million during the first quarter of 2025. The adjustment was primarily related to additional information obtained regarding the valuation of rental equipment as of the acquisition date.

---

| | |
|:---|:---|
| | **Otay** |
| Accounts receivable | $14 |
| Rental equipment | 120 |
| Property and equipment | 8 |
| Intangibles(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 65 |
| &nbsp;&nbsp;**Total identifiable assets acquired** | 207 |
| Current liabilities | 1 |
| &nbsp;&nbsp;**Net identifiable assets acquired** | 206 |
| Goodwill<sup>(b)</sup> | 67 |
| &nbsp;&nbsp;**Net assets acquired** | $**273** |

---

(a) The following table reflects the fair values and useful lives of the acquired intangible assets identified (in millions):

---

| | | |
|:---|:---|:---|
| | **Otay** | **Life (years)** |
| Customer relationships | $61 | 14 |
| Non-compete agreements | 4 | 5 |
| &nbsp;&nbsp;**Total acquired intangible assets** | $**65** |  |

---

(b) The level of goodwill that resulted from the acquisition is primarily reflective of operational synergies that the Company expects to achieve that are not associated with identifiable assets, the value of Otay's assembled workforce and new customer relationships expected to arise from the acquisition. All of the goodwill is expected to be deductible for income tax purposes.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

***Pro Forma Supplementary Data***

The unaudited pro forma supplementary data presented in the table below (in millions) gives effect to the acquisitions of H&E and Otay as if they had been included in the Company's condensed consolidated results for the entire period reflected. The unaudited pro forma supplementary data is provided for informational purposes only and is not indicative of the Company's results of operations had the acquisitions been included for the period presented, nor is it indicative of the Company's future results.

---

| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** |
| | **Herc** | **H&E** | **Total** |
| Historic/pro forma equipment rental revenues | $870 | $181 | $1051 |
| Historic/pro forma total revenues | 1002 | 217 | 1219 |
| Historic/combined pretax loss | (46) | (36) | (82) |
| Pro forma adjustments to consolidated pretax loss: |  |  |  |
| &nbsp;&nbsp;Impact of fair value adjustments/useful life changes on depreciation<sup>(a)</sup> |  | 12 | 12 |
| &nbsp;&nbsp;Intangible asset amortization<sup>(b)</sup> |  | (18) | (18) |
| &nbsp;&nbsp;Interest expense<sup>(c)</sup> |  | (41) | (41) |
| &nbsp;&nbsp;Elimination of historic interest<sup>(d)</sup> |  | 10 | 10 |
| &nbsp;&nbsp;Transaction expenses<sup>(e)</sup> |  | 112 | 112 |
| **Pro forma pretax loss** |  |  | $**(7)** |

---

---

| | | | |
|:---|:---|:---|:---|
| | **Six Months Ended June 30, 2025** | **Six Months Ended June 30, 2025** | **Six Months Ended June 30, 2025** |
| | **Herc** | **H&E** | **Total** |
| Historic/pro forma equipment rental revenue | $1609 | $455 | $2064 |
| Historic/pro forma total revenues | 1863 | 536 | 2399 |
| Historic/combined pretax loss | (54) | (44) | (98) |
| Pro forma adjustments to consolidated pretax loss: |  |  |  |
| &nbsp;&nbsp;Impact of fair value adjustments/useful life changes on depreciation<sup>(a)</sup> |  | 33 | 33 |
| &nbsp;&nbsp;Intangible asset amortization<sup>(b)</sup> |  | (45) | (45) |
| &nbsp;&nbsp;Interest expense<sup>(c)</sup> |  | (104) | (104) |
| &nbsp;&nbsp;Elimination of historic interest<sup>(d)</sup> |  | 26 | 26 |
| &nbsp;&nbsp;Transaction expenses<sup>(e)</sup> |  | 195 | 195 |
| **Pro forma pretax income** |  |  | $**7** |

---

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30, 2024** | **Three Months Ended June 30, 2024** | **Three Months Ended June 30, 2024** | **Three Months Ended June 30, 2024** |
| | **Herc** | **Otay** | **H&E** | **Total** |
| Historic/pro forma equipment rental revenue | $765 | $19 | $312 | $1096 |
| Historic/pro forma total revenues | 848 | 20 | 377 | 1245 |
| Historic/combined pretax income | 93 | 1 | 45 | 139 |
| Pro forma adjustments to consolidated pretax income: |  |  |  |  |
| &nbsp;&nbsp;Impact of fair value adjustments/useful life changes on depreciation<sup>(a)</sup> |  | 1 | 18 | 19 |
| &nbsp;&nbsp;Intangible asset amortization<sup>(b)</sup> |  | (3) | (27) | (30) |
| &nbsp;&nbsp;Interest expense<sup>(c)</sup> |  | (4) | (76) | (80) |
| &nbsp;&nbsp;Elimination of historic interest<sup>(d)</sup> |  | 2 | 18 | 20 |
| &nbsp;&nbsp;Transaction expenses<sup>(e)</sup> |  | 1 |  | 1 |
| **Pro forma pretax income** |  |  |  | $**69** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30, 2024** | **Six Months Ended June 30, 2024** | **Six Months Ended June 30, 2024** | **Six Months Ended June 30, 2024** |
| | **Herc** | **Otay** | **H&E** | **Total** |
| Historic/pro forma equipment rental revenue | $1484 | $36 | $608 | $2128 |
| Historic/pro forma total revenues | 1652 | 38 | 748 | 2438 |
| Historic/combined pretax income | 174 | 3 | 81 | 258 |
| Pro forma adjustments to consolidated pretax income: |  |  |  |  |
| &nbsp;&nbsp;Impact of fair value adjustments/useful life changes on depreciation<sup>(a)</sup> |  | 3 | 35 | 38 |
| &nbsp;&nbsp;Intangible asset amortization<sup>(b)</sup> |  | (5) | (54) | (59) |
| &nbsp;&nbsp;Interest expense<sup>(c)</sup> |  | (9) | (154) | (163) |
| &nbsp;&nbsp;Elimination of historic interest<sup>(d)</sup> |  | 3 | 36 | 39 |
| &nbsp;&nbsp;Transaction expenses<sup>(e)</sup> |  | 1 | (47) | (46) |
| **Pro forma pretax income** |  |  |  | $**67** |

---

(a) Depreciation of rental equipment was adjusted for the fair value at acquisition and changes in useful lives of equipment acquired.

(b) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets.

(c) As discussed above, the Company funded in part the Otay and H&E acquisitions with borrowings under various long-term debt instruments. Interest expense was adjusted to reflect interest on such borrowings.

(d) Historic interest on debt that is not part of the combined entity was eliminated.

(e) Transaction expenses associated with the Otay and H&E acquisitions that were contingent upon closing, whether incurred by the Company or the acquiree, were assumed to have been recognized as of the beginning of the earliest period disclosed. Non-contingent transaction expenses were assumed to have been recognized prior to the earliest period presented and were excluded from the periods presented.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

**Note 6—Goodwill and Intangible Assets** 

***Goodwill***

The following summarizes the Company's goodwill (in millions):

---

| | | |
|:---|:---|:---|
| | **June 30, 2025** | **December 31, 2024** |
| **Balance at the beginning of the period:** | | |
| Goodwill, gross | $1334 | $1154 |
| Accumulated impairment losses | (664) | (671) |
| &nbsp;&nbsp;&nbsp;**Goodwill** | **670** | **483** |
| Additions | 2229 | 190 |
| Currency translation | 2 | (3) |
| **Balance at the end of the period:** |  |  |
| Goodwill, gross | 3570 | 1334 |
| Accumulated impairment losses | (669) | (664) |
| &nbsp;&nbsp;&nbsp;**Goodwill** | $**2901** | $**670** |

---

***Intangible Assets***

Intangible assets, net, consisted of the following major classes (in millions):

---

| | | | |
|:---|:---|:---|:---|
| | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** |
| | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Value** |
| **Finite-lived intangible assets:** | | | |
| Customer-related and non-compete agreements | $1452 | $(134) | $1318 |
| Internally developed software<sup>(a)</sup> | 48 | (15) | 33 |
| &nbsp;&nbsp;**Total** | **1500** | **(149)** | **1351** |
| **Indefinite-lived intangible assets:** |  |  |  |
| Trade name | 271 |  | 271 |
| &nbsp;&nbsp;**Total intangible assets, net** | $**1771** | $**(149)** | $**1622** |

---

(a) Includes capitalized costs of $22 million yet to be placed into service.

---

| | | | |
|:---|:---|:---|:---|
| | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| | **Gross Carrying<br>Amount** | **Accumulated<br>Amortization** | **Net Carrying Value** |
| **Finite-lived intangible assets:** | | | |
| Customer-related and non-compete agreements | $382 | $(106) | $276 |
| Internally developed software<sup>(a)</sup> | 39 | (14) | 25 |
| &nbsp;&nbsp;**Total** | **421** | **(120)** | **301** |
| **Indefinite-lived intangible assets:** |  |  |  |
| Trade name | 271 |  | 271 |
| &nbsp;&nbsp;**Total intangible assets, net** | $**692** | $**(120)** | $**572** |

---

(a) Includes capitalized costs of $14 million yet to be placed into service.

Amortization of intangible assets was $20 million and $31 million for the three and six months ended June 30, 2025, respectively, and $10 million and $20 million for the three and six months ended June 30, 2024, respectively.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

**Note 7—Assets Held for Sale** 

The Company's assets held for sale consists of the Cinelease studio entertainment and lighting and grip equipment rental business ("Cinelease"). The film and studio entertainment industry has shifted to a studio centric model where owning or managing a large footprint of studios is becoming more important to be a competitive equipment rental provider, requiring significant investment in fully managed studios. This business model is a departure from the Company's stated growth strategy.

During the fourth quarter of 2023, it was determined that Cinelease met all criteria to be classified as assets held for sale with the expectation of a transaction to be completed within 12 months. Since the determination was made, market conditions changed due to labor strikes within the industry that had impacts to Cinelease which slowed the process of exploring strategic alternatives.

The Company assesses the fair value, less estimated costs to sell, each reporting period it remains classified as held for sale. During the second quarter of 2025, there was indication that the carrying value of Cinelease was greater than the fair value, less estimated costs to sell, based on slower than anticipated return of productions subsequent to settlement of actual and potential labor strikes, therefore an impairment analysis was performed. The fair value was estimated using a market approach based on offers received through a competitive bid process, exclusive of potential earnouts for future performance. As a result, the Company recorded an $49 million loss during the second quarter of 2025 to record the net assets of Cinelease at the fair value, less costs to sell.

The following table summarizes the assets and liabilities held for sale (in millions):

---

| | | |
|:---|:---|:---|
| | **June 30, 2025** | **December 31, 2024** |
| **Assets held for sale:** | | |
| Cash and cash equivalents | $4 | $— |
| Receivables, net of allowances | 8 | 6 |
| Other current assets | 11 | 11 |
| **&nbsp;&nbsp;&nbsp;&nbsp;Total current assets held for sale** | $**23** | $**17** |
| Rental equipment, net | $102 | $124 |
| Property and equipment, net | 19 | 23 |
| Right-of-use lease assets | 38 | 47 |
| Intangible assets, net | 2 | 2 |
| Other long-term assets | 19 | 24 |
| **&nbsp;&nbsp;&nbsp;&nbsp;Total long-term assets held for sale** | $**180** | $**220** |
| **Liabilities held for sale:** |  |  |
| Current maturities of operating lease liabilities | $7 | $7 |
| Accounts payable | 6 | 5 |
| Accrued liabilities | 6 | 3 |
| **&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities held for sale** | $**19** | $**15** |
| Operating lease liabilities | $56 | $60 |
| **&nbsp;&nbsp;&nbsp;&nbsp;Total long-term liabilities held for sale** | $**56** | $**60** |

---

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

**Note 8—Leases** 

The Company leases real estate, office equipment and service vehicles. The Company's leases have remaining lease terms of up to 22 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,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| |<br>**Classification** | **2025** | **2024** | **2025** | **2024** |
| Operating lease cost<sup>(a)</sup> | Direct operating | $46 | $41 | $84 | $77 |
| Finance lease cost: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Amortization of ROU assets | Depreciation and amortization | 5 | 4 | 9 | 8 |
| &nbsp;&nbsp;&nbsp;Interest on lease liabilities | Interest expense, net |  |  | 1 | 1 |
| Sublease income | Equipment rental revenue | (19) | (21) | (34) | (39) |
| &nbsp;&nbsp;**Net lease cost** | &nbsp;&nbsp;**Net lease cost** | $**32** | $**24** | $**60** | $**47** |

---

(a) Includes short-term leases of $14 million and $25 million for the three and six months ended June 30, 2025 respectively, and $18 million and $32 million for the three and six months ended June 30, 2024, respectively, and variable lease costs of $2 million and $4 million for the three and six months ended June 30, 2025, respectively, and $1 million and $2 million for the three and six months ended June 30, 2024, respectively.

**Note 9—Debt** 

The Company's debt consists of the following (in millions):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Weighted Average Effective Interest Rate at June 30, 2025** | **Weighted Average Stated Interest Rate at June 30, 2025** | **Fixed or Floating Interest Rate** | **Maturity** | **June 30,<br>2025** | **December 31,<br>2024** |
| **Senior Notes** | | | | | | |
| &nbsp;&nbsp;&nbsp;&nbsp;2027 Notes | 5.61% | 5.50% | Fixed | 2027 | $1200 | $1200 |
| &nbsp;&nbsp;&nbsp;&nbsp;2029 Notes | 6.91% | 6.63% | Fixed | 2029 | 800 | 800 |
| &nbsp;&nbsp;&nbsp;&nbsp;2030 Notes | 7.25% | 7.00% | Fixed | 2030 | 1650 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;2033 Notes | 7.43% | 7.25% | Fixed | 2033 | 1100 |  |
| **Other Debt** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;New ABL Credit Facility | N/A | 5.42% | Floating | 2030 | 2389 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Prior ABL Credit Facility | N/A | N/A | N/A | N/A |  | 1621 |
| &nbsp;&nbsp;&nbsp;&nbsp;Term Loan Facility | 6.56% | 6.32% | Floating | 2032 | 750 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;AR Facility | N/A | 5.18% | Floating | 2025 | 357 | 400 |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance lease liabilities | 4.44% | N/A | Fixed | 2025-2044 | 78 | 77 |
| *Unamortized debt issuance costs and debt discount*<sup>(a)</sup> | *Unamortized debt issuance costs and debt discount*<sup>(a)</sup> | *Unamortized debt issuance costs and debt discount*<sup>(a)</sup> | *Unamortized debt issuance costs and debt discount*<sup>(a)</sup> | *Unamortized debt issuance costs and debt discount*<sup>(a)</sup> | (50) | (12) |
| &nbsp;&nbsp;**Total debt** | &nbsp;&nbsp;**Total debt** | &nbsp;&nbsp;**Total debt** | &nbsp;&nbsp;**Total debt** | &nbsp;&nbsp;**Total debt** | **8274** | **4086** |
| Less: Current maturities of long-term debt | Less: Current maturities of long-term debt | Less: Current maturities of long-term debt | Less: Current maturities of long-term debt | Less: Current maturities of long-term debt | (23) | (17) |
| &nbsp;&nbsp;**Total long-term debt, net** | &nbsp;&nbsp;**Total long-term debt, net** | &nbsp;&nbsp;**Total long-term debt, net** | &nbsp;&nbsp;**Total long-term debt, net** | &nbsp;&nbsp;**Total long-term debt, net** | $**8251** | $**4069** |

---

(a)&nbsp;&nbsp;&nbsp;&nbsp;Unamortized debt issuance costs totaling $13 million related to the New ABL Credit Facility and AR Facility (as each is defined below) as of June 30, 2025 and $6 million related to the Prior ABL Credit Facility and AR Facility (as each is defined below) as of December 31, 2024, are included in "Other long-term assets" in the condensed consolidated balance sheets.

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

The effective interest rates for the fixed rate 2027 Notes, 2029 Notes, 2030 Notes, and 2033 Notes (as each is defined below) includes the stated interest on the notes and the amortization of any debt issuance costs. The effective interest rate for the variable rate Term Loan Facility (as defined below) includes the stated interest on the loan and the amortization of debt discount and debt issuance costs.

***Senior Notes—2027 Notes***

On July 9, 2019, the Company issued $1.2 billion aggregate principal amount of its 5.50% Senior Notes due 2027 (the "2027 Notes"). Interest on the 2027 Notes accrues at the rate of 5.50% per annum and is payable semi-annually in arrears on January 15 and July 15. The 2027 Notes will mature on July 15, 2027. Additional information about the 2027 Notes is included in Note 11, "Debt" to the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024.

***Senior Notes—2029 Notes***

On June 7, 2024, the Company issued $800 million aggregate principal amount of its 6.625% Senior Notes due 2029 (the "2029 Notes"). Interest on the 2029 Notes accrues at the rate of 6.625% per annum and will be payable semi-annually in arrears on June 15 and December 15 of each year. The 2029 Notes will mature on June 15, 2029. Additional information about the 2029 Notes is included in Note 11, "Debt" to the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024.

***Senior Notes—2030 Notes***

On June 2, 2025, the Company issued $1.65 billion aggregate principal amount of its 7.000% Senior Notes due 2030 (the "2030 Notes"). The net proceeds were used to finance, in part, the H&E acquisition and to pay related fees and expenses. Interest on the 2030 Notes accrues at the rate of 7.00% per annum and will be payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2025. The 2030 Notes will mature on June 15, 2030.

*Ranking; Guarantees*

The 2030 Notes are the Company's senior unsecured obligations, ranking equally in right of payment with all of the Company's existing and future senior indebtedness, effectively junior to any of the Company's existing and future secured indebtedness, including the New ABL Credit Facility and Term Loan Facility (as defined below), to the extent of the value of the assets securing such indebtedness, and senior in right of payment to any of the Company's existing and future subordinated indebtedness. The 2030 Notes are guaranteed on a senior unsecured basis, subject to limited exceptions including special purpose securitization subsidiaries, by the Company's current and future domestic subsidiaries.

*Redemption*

The Company may, at its option, redeem the 2030 Notes, in whole or in part, at any time prior to June 15, 2027, at a price equal to 100% of the aggregate principal amount of the 2030 Notes, plus the applicable make-whole premium and accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company may, at its option, redeem the 2030 Notes, in whole or in part, at any time (i) on or after June 15, 2027 and prior to June 15, 2028, at a price equal to 103.500% of the principal amount of the 2030 Notes, (ii) on or after June 15, 2028 and prior to June 15, 2029, at a price equal to 101.750% of the principal amount of the 2030 Notes and (iii) on or after June 15, 2029, at a price equal to 100.000% of the principal amount of the 2030 Notes, in each case, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time on or prior to June 15, 2027, the Company may, at its option, redeem up to 40% of the aggregate principal amount of the 2030 Notes with the net cash proceeds of one or more equity offerings at a redemption price equal to 107.000% of the principal amount of the 2030 Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

*Covenants*

The indenture governing the 2030 Notes contains certain covenants applicable to the Company and its restricted subsidiaries, including limitations on: indebtedness; restricted payments; liens; dispositions of proceeds from asset sales; transactions with affiliates; dividends and other payment restrictions affecting restricted subsidiaries; designations of unrestricted subsidiaries; and mergers, consolidations and sale of assets. Upon the occurrence of certain events constituting a change of control triggering event, the Company is required to make an offer to repurchase all of the 2030 Notes (unless otherwise redeemed) at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. If

------

<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u> &nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

the Company sells assets under certain circumstances, it must use the proceeds to make an offer to purchase the 2030 Notes at a price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

*Events of Default* 

The indenture also provides for customary events of default, including the following (subject to any applicable cure period): nonpayment, breach of covenants in the indenture, payment defaults under or acceleration of certain other indebtedness, failure to discharge certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs or is continuing, the trustee or the holders of at least 30% in aggregate principal amount of the 2030 Notes then outstanding may declare the principal of, premium, if any, and accrued and unpaid interest, if any, to be due and payable immediately.

***Senior Notes—2033 Notes***

On June 2, 2025, the Company issued $1.1 billion aggregate principal amount of its 7.250% Senior Notes due 2033 (the "2033 Notes" and, together with the 2027 Notes, 2029 Notes and 2030 Notes, the "Notes"). The net proceeds were used to finance, in part, the H&E acquisition and to pay related fees and expenses. Interest on the 2033 Notes accrues at the rate of 7.250% per annum and will be payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2025. The 2033 Notes will mature on June 15, 2033.

*Ranking; Guarantees*

The 2033 Notes are the Company's senior unsecured obligations, ranking equally in right of payment with all of the Company's existing and future senior indebtedness, effectively junior to any of the Company's existing and future indebtedness, including the New ABL Credit Facility and Term Loan Facility (both as defined below), to the extent of the value of the assets securing such indebtedness, and senior in right of payment to any of the Company's existing and future subordinated indebtedness. The 2033 Notes are guaranteed on a senior unsecured basis, subject to limited exceptions including special purpose securitization subsidiaries, by the Company's current and future domestic subsidiaries.

*Redemption*

The Company may, at its option, redeem the 2033 Notes, in whole or in part, at any time prior to June 15, 2028, at a price equal to 100% of the aggregate principal amount of the 2033 Notes, plus the applicable make-whole premium and accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company may, at its option, redeem the 2033 Notes, in whole or in part, at any time (i) on or after June 15, 2028 and prior to June 15, 2029, at a price equal to 103.625% of the principal amount of the 2033 Notes, (ii) on or after June 15, 2029 and prior to June 15, 2030, at a price equal to 101.813% of the principal amount of the 2033 Notes and (iii) on or after June 15, 2030, at a price equal to 100.000% of the principal amount of the 2033 Notes, in each case, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time on or prior to June 15, 2028, the Company may, at its option, redeem up to 40% of the aggregate principal amount of the 2033 Notes with the net cash proceeds of one or more equity offerings at a redemption price equal to 107.250% of the principal amount of the 2033 Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

*Covenants*

The indenture governing the 2033 Notes contains certain covenants applicable to the Company and its restricted subsidiaries, including limitations on: indebtedness; restricted payments; liens; dispositions of proceeds from asset sales; transactions with affiliates; dividends and other payment restrictions affecting restricted subsidiaries; designations of unrestricted subsidiaries; and mergers, consolidations and sale of assets. Upon the occurrence of certain events constituting a change of control triggering event, the Company is required to make an offer to repurchase all of the 2033 Notes (unless otherwise redeemed) at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. If the Company sells assets under certain circumstances, it must use the proceeds to make an offer to purchase the 2033 Notes at a price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

*Events of Default* 

The indenture also provides for customary events of default, including the following (subject to any applicable cure period): nonpayment, breach of covenants in the indenture, payment defaults under or acceleration of certain other indebtedness, failure to discharge certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs or

is continuing, the trustee or the holders of at least 30% in aggregate principal amount of the 2033 Notes then outstanding may declare the principal of, premium, if any, and accrued and unpaid interest, if any, to be due and payable immediately.

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**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

***New ABL Credit Facility***

On June 2, 2025, Herc Holdings, Herc, Matthews Equipment Limited and certain other subsidiaries of Herc Holdings entered into a credit agreement with respect to a new senior secured asset-based revolving credit facility (the "New ABL Credit Facility"), which refinanced in full and replaced the then existing asset-based credit facility entered into on July 31, 2019 ("Prior ABL Credit Facility") and related collateral/security agreements. The Company borrowed $2.5 billion under the New ABL Credit Facility to repay all amounts outstanding under the Prior ABL Credit Facility and fund, in part, the H&E acquisition.

The New ABL Credit Facility provides for aggregate maximum borrowings of up to $4.0 billion (subject to availability under a borrowing base). Up to $250 million of the revolving loan facility is available for the issuance of letters of credit, subject to certain conditions including issuing lender participation. Subject to the satisfaction of certain conditions and limitations, the New ABL Credit Facility allows for the addition of incremental revolving commitments and/or incremental term loans.

*Maturity*

The New ABL Credit Facility matures on June 2, 2030.

*Guarantees; Collateral/Security*

The obligations of each of the borrowers under the New ABL Credit Facility are guaranteed by each of Herc Holdings' direct and indirect U.S. and Canadian subsidiaries, with certain exceptions, including special purpose securitization subsidiaries. The obligations of the borrowers under the New ABL Credit Facility and the guarantees thereof are secured by security interests in substantially all of the assets of each borrower and guarantor, including pledges of all the capital stock of all of their direct subsidiaries, with certain exceptions. The security interests under the New ABL Credit Facility rank *pari passu* with the security interests granted to the Term Loan Facility. The liens securing the New ABL Credit Facility are subject to certain exceptions. Also, subject to certain limitations and conditions, the New ABL Credit Facility permits the incurrence of future secured debt on a basis either *pari passu* with, or subordinated to, the liens securing the New ABL Credit Facility.

On June 2, 2025, in connection with the New ABL Credit Facility, the Company and certain of its U.S. subsidiaries of entered into an Amended and Restated U.S. Guarantee and Collateral Agreement, and Matthews Equipment Limited and certain Canadian subsidiaries entered into an Amended and Restated Canadian Guarantee and Collateral Agreement.

*Interest*

The interest rates applicable to any loans under the New ABL Credit Facility are based, at the option of the borrowers, on (i) a floating rate based on Term SOFR (for loans denominated in U.S. dollars) or Term CORRA (for loans denominated in Canadian dollars) plus an initial margin of 1.375% per annum or (ii) a base rate plus an initial margin of 0.375%, in each case, where margin is adjusted under the New ABL Credit Facility based on the quarterly average excess availability under the New ABL Credit Facility.

*Covenants*

The New ABL Credit Facility contains a number of covenants that, among other things, limit or restrict the ability of the borrowers and their subsidiaries to incur additional indebtedness, prepay other indebtedness, make dividends and other restricted payments, create or incur liens, make acquisitions and other investments, engage in mergers, consolidations or sales of assets, engage in certain transactions with affiliates, and enter into certain restrictive agreements limiting the ability to create or incur liens. In addition, under the New ABL Credit Facility, upon excess availability falling below certain levels, the borrowers will be required to comply with a minimum fixed charge coverage ratio of no less than 1.00:1.00.

*Events of Default*

The New ABL Credit Facility provides that the occurrence of any of the following events will constitute an event of default: payment default, breach of representation or warranty, covenant breach, cross default to other material indebtedness, certain bankruptcy events, dissolution, invalidity of the credit agreement or any intercreditor agreement (if any), judgment in excess of a certain monetary threshold, any security or guarantee documents cease to be in effect, an ERISA event, pension event or a change of control. Upon the occurrence and during the continuation of an event of default, the agent may exercise remedies on behalf of the lenders, including accelerating the repayment of outstanding loans under the New ABL Credit Facility.

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**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

***Prior ABL Credit Facility***

The Company's Prior ABL Credit Facility, executed by Herc Holdings, Herc and certain other subsidiaries of Herc Holdings, provided a senior secured asset-based revolving credit facility with aggregate maximum borrowings of up to $3.5 billion (subject to availability under a borrowing base) that had a maturity date of July 5, 2027. Up to $250 million of the revolving loan facility was available for the issuance of letters of credit, subject to certain conditions including issuing lender participation. Additional information about the Prior ABL Credit Facility is included in Note 11, "Debt" to the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024.

As discussed above, the Company used borrowings under the New ABL Credit Facility to repay all amounts outstanding under the Prior ABL Credit Facility.

***Term Loan Facility***

On June 2, 2025, the Company and certain other subsidiaries of the Company entered into a credit agreement (the "Term Loan Credit Agreement") with respect to a senior secured term loan facility (the "Term Loan Facility") of $750 million.

The Company and each existing and future direct or indirect U.S. subsidiary of the Company (the "Guarantors") provide unconditional guarantees of the obligations of the Company. In addition, the obligations of the Company under the Term Loan Facility and the guarantees of the Guarantors are secured by first priority security interests in substantially all of the tangible and intangible assets of the Company and the Guarantors, including pledges of all stock or other equity interests in direct subsidiaries owned by the Company and the Guarantors (but only up to 65% of the voting stock of each direct foreign subsidiary owned by the Company or any Guarantor). The security interests under the Term Loan Facility rank *pari passu* with the security interests granted pursuant to the New ABL Credit Facility. The security interests and pledges are subject to certain exceptions.

The principal obligations under the Term Loan Facility are to be repaid in quarterly installments, beginning with the quarter ended December 31, 2025, in an aggregate amount equal to 1.00% per annum, with the balance due at the maturity of the Term Loan Facility. The Term Loan Facility matures on June 2, 2032. Amounts drawn under the Term Loan Facility bear annual interest at either the Term SOFR rate plus a margin of 2.00% or at a base rate (equal to the highest of Wells Fargo Bank, National Association's prime rate, the federal funds rate plus 0.5%, or one month Term SOFR plus 1.0%) plus a margin of 1.00%.

The Term Loan Facility contains covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries to incur additional indebtedness; incur additional liens; make dividends and other restricted payments; and engage in mergers, acquisitions and dispositions. The Term Loan Facility does not include any financial covenants. The Term Loan Credit Agreement contains customary events of default. If an event of default occurs, the lenders are entitled to accelerate the loans made thereunder and exercise rights against the collateral.

On June 2, 2025, in connection with the credit agreement, the Company and certain of its U.S. subsidiaries entered into a U.S. Guarantee and Collateral Agreement, and Matthews Equipment Limited and certain Canadian subsidiaries entered into a Canadian Guarantee and Collateral Agreement.

The Company used the proceeds of the Term Loan Facility to finance, in part, the H&E acquisition and to pay related fees and expenses.

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**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

***Accounts Receivable Securitization Facility***

The accounts receivable securitization facility (the "AR Facility"), as amended, matures on August 31, 2025 and has aggregate commitments up to $400 million. In connection with the AR Facility, Herc sells its accounts receivables on an ongoing basis to Herc Receivables U.S. LLC, a wholly-owned special-purpose entity (the "SPE"). The SPE's sole business consists of the purchase by the SPE of accounts receivable from Herc and borrowing by the SPE against the eligible accounts receivable from the lenders under the facility. The borrowings are secured by liens on the accounts receivable and other assets of the SPE. Collections on the accounts receivable are used to service the borrowings. The SPE is a separate legal entity that is consolidated in the Company's financial statements. 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. Herc is the servicer of the accounts receivable under the AR Facility. All of the obligations of the servicer and certain indemnification obligations of the SPE under the agreements governing the AR Facility are guaranteed by Herc pursuant to a performance guarantee. 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 New ABL Credit Facility.

***Bridge Facility***

In February 2025, the Company entered into a commitment letter for a senior secured 364-day term loan bridge facility (the "Bridge Facility") for an aggregate principal amount of up to $4.5 billion that provided committed financing for the acquisition of H&E. No balances were drawn against this facility, as the commitment letter was terminated after entering into the 2030 Notes and 2033 Notes offering, Term Loan Facility and refinancing of the Prior ABL Credit Facility and subsequent borrowings under the New ABL Credit Facility.

***Borrowing Capacity and Availability***

After outstanding borrowings, the following was available to the Company under the New ABL Credit Facility and AR Facility as of June 30, 2025 (in millions):

---

| | | |
|:---|:---|:---|
| | **Remaining<br>Capacity** | **Availability Under<br>Borrowing Base <br>Limitation** |
| New ABL Credit Facility | $1562 | $1562 |
| AR Facility | 43 | 16 |
| &nbsp;&nbsp;&nbsp;**Total** | $**1605** | $**1578** |

---

***Letters of Credit***

As of June 30, 2025, $49 million of standby letters of credit were issued and outstanding, none of which have been drawn upon. The New ABL Credit Facility had $201 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.

**Note 10—Financing Obligations** 

In prior years, Herc entered into sale-leaseback transactions pursuant to which it sold 44 properties located in the U.S. and certain service vehicles. The sale of the properties and service vehicles did not qualify for sale-leaseback accounting; therefore, the book value of the assets remain on the Company's consolidated balance sheet. The Company's financing obligations consist of the following (in millions):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Weighted Average Effective Interest Rate at June 30, 2025** | **Maturities** | **June 30, 2025** | **December 31, 2024** |
| Financing obligations | 5.45% | 2026-2038 | $105 | $107 |
| Unamortized financing issuance costs | Unamortized financing issuance costs | Unamortized financing issuance costs | (2) | (2) |
| &nbsp;&nbsp;&nbsp;**Total financing obligations** | &nbsp;&nbsp;&nbsp;**Total financing obligations** | &nbsp;&nbsp;&nbsp;**Total financing obligations** | **103** | **105** |
| Less: Current maturities of financing obligations | Less: Current maturities of financing obligations | Less: Current maturities of financing obligations | (5) | (4) |
| &nbsp;&nbsp;**Financing obligations, net** | &nbsp;&nbsp;**Financing obligations, net** | &nbsp;&nbsp;**Financing obligations, net** | $**98** | $**101** |

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**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

**Note 11—Income Taxes** 

Income tax benefit was $11 million for the three months ended June 30, 2025 compared to a provision of $23 million in the same period of 2024. The income tax benefit in the current period was primarily driven by the level of pre-tax loss and non-deductible transaction costs.

Income tax benefit was $1 million for the six months ended June 30, 2025 compared to a provision $39 million in the same period of 2024. The provision was driven by the level of pre-tax loss, non-deductible transaction costs and a benefit related to stock-based compensation.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and the restoration of favorable tax treatment for certain business provisions, particularly with respect to allowing accelerated tax deductions for qualified property and equipment expenditures and the business interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing the potential impacts on its consolidated financial position, results of operations and cash flows.

**Note 12—Accumulated Other Comprehensive Income (Loss)** 

The changes in the accumulated other comprehensive income (loss) balance by component (net of tax) for the six months ended June 30, 2025 are presented in the table below (in millions).

---

| | | | |
|:---|:---|:---|:---|
| | **Pension and Other Post-Employment Benefits** | **Foreign Currency Items** | **Accumulated Other Comprehensive Income (Loss)** |
| **Balance at December 31, 2024** | $**(19)** | $**(123)** | $**(142)** |
| Other comprehensive loss |  | 17 | 17 |
| **Balance at June 30, 2025** | $**(19)** | $**(106)** | $**(125)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**Note 13—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.

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**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

**Off-Balance Sheet Commitments**

*Indemnification Obligations*

In the ordinary course of business, the Company executes contracts involving indemnification obligations customary in the relevant industry and indemnifications specific to a transaction such as the sale of a business or assets or a financial transaction. These indemnification obligations might include claims relating to the following: accuracy of representations; compliance with covenants and agreements by the Company or third parties; environmental matters; intellectual property rights; governmental regulations; employment-related matters; customer, supplier and other commercial contractual relationships; condition of assets; and financial or other matters. Performance under these indemnification obligations would generally be triggered by a breach of terms of the contract or by a third-party claim. The Company regularly evaluates the probability of having to incur costs associated with these indemnification obligations and has accrued for expected losses that are probable and estimable. The types of indemnification obligations for which payments are possible include the following:

&nbsp;&nbsp;&nbsp;&nbsp;*The Spin-Off*

In connection with the Spin-Off, pursuant to the separation and distribution agreement (agreements and defined terms are discussed in Note 16, "Arrangements with New Hertz"), the Company has assumed the liability for, and control of, all pending and threatened legal matters related to its equipment rental business and related assets, as well as assumed or retained liabilities, and will indemnify New Hertz for any liability arising out of or resulting from such assumed legal matters. The separation and distribution agreement also provides for certain liabilities to be shared by the parties. The Company is responsible for a portion of these shared liabilities (typically 15%), as set forth in that agreement. New Hertz is responsible for managing the settlement or other disposition of such shared liabilities. Pursuant to the tax matters agreement, the Company has agreed to indemnify New Hertz for any resulting taxes and related losses if the Company takes or fails to take any action (or permits any of its affiliates to take or fail to take any action) that causes the Spin-Off and related transactions to be taxable, or if there is an acquisition of the equity securities or assets of the Company or of any member of the Company's group that causes the Spin-Off and related transactions to be taxable.

**Note 14—Fair Value Measurements** 

***Assets and Liabilities Measured at Fair Value on a Recurring Basis***

The fair value of cash, accounts receivable, accounts payable and accrued liabilities, to the extent the underlying liability will be settled in cash, approximates the carrying values because of the short-term nature of these instruments.

<u>Cash Equivalents</u>

Cash equivalents primarily consist of money market accounts which are classified as Level 1 assets which the Company measures at fair value on a recurring basis. The Company measures the fair value of cash equivalents using a market approach based on quoted prices in active markets. The Company had $17 million in cash equivalents at June 30, 2025 and $27 million at December 31, 2024.

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**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

<u>Debt Obligations</u>

The fair values of the Company's New ABL Credit Facility, Prior ABL Credit Facility, AR Facility and finance lease liabilities approximated their book values as of June 30, 2025 and December 31, 2024. The fair value of the Company's Notes and Term Loan Facility are estimated based on quoted market rates as well as borrowing rates currently available to the Company for loans with similar terms and average maturities (Level 2 inputs) (in millions).

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| | **Nominal Unpaid Principal Balance** | **Aggregate Fair Value** | **Nominal Unpaid Principal Balance** | **Aggregate Fair Value** |
| 2027 Notes | $1200 | $1200 | $1200 | $1182 |
| 2029 Notes | 800 | 821 | 800 | 809 |
| 2030 Notes | 1650 | 1718 |  |  |
| 2033 Notes | 1100 | 1150 |  |  |
| Term Loan Facility | 750 | 752 |  |  |
| &nbsp;&nbsp;**Total Notes and Term Loan** | $**5500** | $**5641** | $**2000** | $**1991** |

---

**Note 15—Equity and Earnings (Loss) Per Share** 

***Equity***

On June 2, 2025, the Company completed the acquisition of H&E, and as a result, approximately 4.7 million shares of common stock were issued valued at $584 million as part of the cash and stock offer price as described in Note 5, "Business Combinations." The fair value of the shares issued were based on the closing stock price of the Company's common shares on May 30, 2025, the last trading day preceding the close of the acquisition.

***Earnings (Loss) Per Share***

Basic earnings (loss) per share has been computed based upon the weighted average number of common shares outstanding. Diluted earnings per share has been computed based upon the weighted average number of common shares outstanding plus the effect of all potentially dilutive common stock equivalents, except when the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings (loss) per share (in millions, except per share data).

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Basic and diluted earnings (loss) per share:** |  |  |  |  |
| *Numerator:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss), basic and diluted | $(35) | $70 | $(53) | $135 |
| *Denominator:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic weighted average common shares | 30.0 | 28.4 | 29.2 | 28.3 |
| &nbsp;&nbsp;&nbsp;Stock options, RSUs and PSUs |  | 0.1 |  | 0.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average shares used to calculate diluted earnings per share | 30.0 | 28.5 | 29.2 | 28.4 |
| **Earnings (loss) per share:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $(1.17) | $2.46 | $(1.82) | $4.77 |
| &nbsp;&nbsp;&nbsp;Diluted | $(1.17) | $2.46 | $(1.82) | $4.75 |
| Antidilutive RSUs and PSUs | 0.2 |  | 0.2 |  |

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**HERC HOLDINGS INC. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Unaudited**

**Note 16—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 following the Spin-Off including (i) the manner in which legal matters and claims are allocated and certain liabilities are shared between the Company and New Hertz; (ii) other matters including transfers of assets and liabilities, treatment or termination of intercompany arrangements and releases of certain claims between the parties and their affiliates; (iii) mutual indemnification clauses; and (iv) allocation of Spin-Off expenses between the parties.

***Tax Matters Agreement***

The Company entered into a tax matters agreement with New Hertz that governs the parties' rights, responsibilities and obligations after the Spin-Off with respect to tax liabilities and benefits, tax attributes, tax contests and other tax matters regarding income taxes, other taxes and related tax returns.

**Note 17—Segment Information**

The Company has used the management approach in determining its reportable segments, and has determined that it has two operating segments that are aggregated into one 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, trench shoring, and studio and production equipment. The Company's broad portfolio of equipment for rent is fungible and can be deployed throughout the geographies where the Company does business.

The Company's Chief Operating Decision Maker ("CODM") has been identified as its chief executive officer ("CEO"). 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 of the equipment rental segment is reported on the consolidated statement of operations as consolidated net income. Additionally, the measures of segment assets are reported on the consolidated balance sheet as total consolidated assets and rental equipment, which is also disclosed in Note 4, "Rental Equipment."

There are no significant segment expenses other than those presented on the consolidated statement of operations and the Company does not have intra-entity sales.

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**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** 

*Management's discussion and analysis of financial condition and results of operations ("MD&A") should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Report, which include additional information about our accounting policies, practices and the transactions underlying our financial results. The preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make estimates and assumptions that affect the reported amounts in our unaudited condensed consolidated financial statements and the accompanying notes including receivables allowances, depreciation of rental equipment, the recoverability of long-lived assets, useful lives and impairment of long-lived tangible and intangible assets including goodwill and trade name, pension and postretirement benefits, valuation of stock-based compensation, reserves for litigation and other contingencies, accounting for income taxes and other matters arising during the normal course of business. We apply our best judgment, our knowledge of existing facts and circumstances and our knowledge of actions that we may undertake in the future in determining the estimates that will affect our condensed consolidated financial statements. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision, actual results may differ from these estimates.*

***OVERVIEW OF OUR BUSINESS AND OPERATING ENVIRONMENT***

We are engaged principally in the business of renting equipment. Ancillary to our principal business of equipment rental, we also sell used rental equipment, sell new equipment and consumables and offer certain services and support to our customers. Our profitability is dependent upon a number of factors including the volume, mix and pricing of rental transactions and the utilization of equipment. Significant changes in the purchase price or residual values of equipment or interest rates can have a significant effect on our profitability depending on our ability to adjust pricing for these changes. Our business requires significant expenditures for equipment, and consequently we require substantial liquidity to finance such expenditures. See "Liquidity and Capital Resources" below.

Our revenues primarily are derived from rental and related charges and consist of:

&nbsp;&nbsp;&nbsp;&nbsp;• Equipment rental (includes all revenue associated with the rental of equipment including ancillary revenue from delivery, rental protection programs and fueling charges);

&nbsp;&nbsp;&nbsp;&nbsp;• Sales of rental equipment and sales of new equipment, parts and supplies; and

&nbsp;&nbsp;&nbsp;&nbsp;• Service and other revenue (primarily relating to training and labor provided to customers).

Our operating expenses primarily consist of:

&nbsp;&nbsp;&nbsp;&nbsp;• 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);

&nbsp;&nbsp;&nbsp;&nbsp;• Cost of sales of rental equipment, new equipment, parts and supplies;

&nbsp;&nbsp;&nbsp;&nbsp;• Depreciation expense relating to rental equipment;

&nbsp;&nbsp;&nbsp;&nbsp;• Selling, general and administrative expenses;

&nbsp;&nbsp;&nbsp;&nbsp;• Non-rental depreciation and amortization; and

&nbsp;&nbsp;&nbsp;&nbsp;• Interest expense.

**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.

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. Additionally, we paid cash to extinguish $1.4 billion of outstanding H&E debt that was not assumed as part of the acquisition. The acquisition was funded by issuance of new

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**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

debt consisting of $2.75 billion in Senior Notes, a $750 million Term Loan Facility and $2.5 billion of borrowings on the New ABL Credit Facility, of which approximately $1.6 billion was used to repay borrowings on the Prior ABL Credit Facility.

H&E was a full-service equipment rental company that provided its customers with a mix of high-quality general rental fleet including aerial work platforms, earthmoving equipment, material handling equipment, 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.

**Recent Developments and Economic Conditions**

Local markets continue to be impacted by the elevated interest rate environment and continued economic uncertainty. 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. During the second quarter of 2025, we financed the acquisition of H&E, in part, with a combination of fixed and floating rate debt. The weighted average effective interest rate on our new debt instruments combined is 6.8%. We monitor our exposure to floating rate debt and reevaluate our capital allocation strategy, as necessary.

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. 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 any direct impact of tariffs on our procurement costs in 2025 as we source the vast majority of our rental equipment domestically. 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.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and the restoration of favorable tax treatment for certain business provisions, particularly with respect to allowing accelerated tax deductions for qualified property and equipment expenditures and the business interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing the potential impacts on our consolidated financial position, results of operations and cash flows.

**Seasonality**

Our business is seasonal, with demand for our rental equipment tending to be lower in the winter months, particularly in the northern United States and Canada. Our equipment rental business, especially in the construction industry, has historically experienced decreased levels of business from December until late spring and heightened activity during our third and fourth quarters until December. We have the ability to manage certain costs to meet market demand, such as fleet capacity, the most significant portion of our cost structure. For instance, to accommodate increased demand, we increase our available fleet and staff during the second and third quarters of the year. A number of our other major operating costs vary directly with revenues or transaction volumes; however, certain operating expenses, including rent, insurance and administrative overhead, remain fixed and cannot be adjusted for seasonal demand, typically resulting in higher profitability in periods when our revenues are higher, and lower profitability in periods when our revenues are lower. To reduce the impact of seasonality, we are focused on expanding our customer base through products that serve different industries with less seasonality and different business cycles.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

***RESULTS OF OPERATIONS***

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Three Months Ended June 30,** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Three Months Ended June 30,** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Three Months Ended June 30,** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Three Months Ended June 30,** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Six Months Ended June 30,** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Six Months Ended June 30,** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Six Months Ended June 30,** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Six Months Ended June 30,** |
| | **2025** | **2024** | **Change** | **Change** | **2025** | **2024** | **Change** | **Change** |
| Equipment rental | $870 | $765 | $105 | 14% | $1609 | $1484 | $125 | 8% |
| Sales of rental equipment | 106 | 65 | 41 | 63 | 211 | 134 | 77 | 57 |
| Sales of new equipment, parts and supplies | 17 | 10 | 7 | 70 | 28 | 19 | 9 | 47 |
| Service and other revenue | 9 | 8 | 1 | 13 | 15 | 15 |  |  |
| &nbsp;&nbsp;&nbsp;**Total revenues** | **1002** | **848** | **154** | **18** | **1863** | **1652** | **211** | **13** |
| Direct operating | 379 | 326 | 53 | 16 | 706 | 633 | 73 | 12 |
| Depreciation of rental equipment | 195 | 165 | 30 | 18 | 367 | 325 | 42 | 13 |
| Cost of sales of rental equipment | 86 | 45 | 41 | 91 | 162 | 91 | 71 | 78 |
| Cost of sales of new equipment, parts and supplies | 10 | 6 | 4 | 67 | 18 | 12 | 6 | 50 |
| Selling, general and administrative | 127 | 117 | 10 | 9 | 245 | 229 | 16 | 7 |
| Transaction expenses | 73 | 3 | 70 | NM | 147 | 6 | 141 | NM |
| Non-rental depreciation and amortization | 45 | 30 | 15 | 50 | 78 | 59 | 19 | 32 |
| Interest expense, net | 86 | 63 | 23 | 37 | 148 | 124 | 24 | 19 |
| Loss on assets held for sale | 49 |  | 49 | NM | 49 |  | 49 | NM |
| Other expense (income), net | (2) |  | (2) | NM | (3) | (1) | (2) | 200 |
| &nbsp;&nbsp;**Income (loss) before income taxes** | **(46)** | **93** | **(139)** | **(149)** | **(54)** | **174** | **(228)** | **(131)** |
| Income tax benefit (provision) | 11 | (23) | 34 | (148) | 1 | (39) | 40 | (103) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net income (loss)** | $**(35)** | $**70** | $**(105)** | **(150)%** | $**(53)** | $**135** | $**(188)** | **(139)%** |

---

*NM - not meaningful*

**Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024** 

Equipment rental revenue increased $105 million, or 14%, during the second quarter of 2025 reflecting an increase in average OEC on rent, which includes the impact of second half 2024 acquisitions and the June 2025 acquisition of H&E. On a pro forma basis including the standalone, pre-aquisition results of Otay and H&E, equipment rental revenue decreased 4% year-over-year. Acquisition disruption prior to closing with respect to H&E's operations contributed to the decline in addition to ongoing moderation in certain local markets where H&E's customer base was heavily concentrated.

Sales of rental equipment increased $41 million, or 63%, during the second quarter of 2025 when compared to the second quarter of 2024 as we increased the volume of sales in line with our fleet rotation planning to improve the equipment mix and manage fleet age focusing on acquisition fleet during the second quarter of 2025. The margin on sales of rental equipment was 19% in 2025 compared to 31% in 2024. The decrease in margin on sale of rental equipment in 2025 resulted from continued normalization of used equipment pricing in the market.

Direct operating expenses in the second quarter of 2025 increased $53 million, or 16%, when compared to the second quarter of 2024. Direct operating expenses were 43.6% of equipment rental revenue in 2025, compared to 42.6% in the prior-year period. The increase as a percent of rental revenue related to lower fixed cost absorption due to the ongoing moderation of certain local markets and the impact of the H&E acquisition, primarily with respect to facilities expense, maintenance and fuel. Total company maintenance expense increased $16 million as total fleet size has increased, facilities expense increased $13 million as we have added more locations through acquisitions and opening greenfield locations and fuel increased $4 million.

Depreciation of rental equipment increased $30 million, or 18%, during the second quarter of 2025 when compared to the second quarter of 2024 due to an increase in average fleet size primarily as a result of the H&E acquisition. Non-rental depreciation and amortization increased $15 million, or 50%, primarily due to amortization of intangible assets related to the H&E and Otay acquisitions and non-rental asset depreciation resulting from the growth of the business.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

Selling, general and administrative expenses increased $10 million, or 9%, in the second quarter of 2025 when compared to the second quarter of 2024. Selling, general and administrative expenses were 14.6% and 15.3% of equipment rental revenue in 2025 compared to 2024, respectively. The improvement as a percent of equipment rental revenue was primarily related to initial cost synergies obtained through reduction of H&E corporate overhead as well as overall cost control measures introduced to mitigate the impact of slowing growth in certain local markets.

Transaction expenses increased $70 million during the second quarter of 2025 when compared to the prior year due to costs incurred related to the acquisition of H&E, primarily advisory fees of $27 million, commitment fees related to the Bridge Facility of $21 million and various other consulting and legal fees.

Interest expense, net increased $23 million, or 37%, during the second quarter of 2025 when compared with the second quarter of 2024 due to increased borrowings of approximately $4.4 billion to fund the H&E acquisition at a weighted average effective interest rate of 6.8%.

Loss on assets held for sale was $49 million during the second quarter of 2025 to adjust the carrying value of Cinelease net assets to its fair value less estimated costs to sell.

Income tax benefit was $11 million during the second quarter of 2025 compared to a provision of $23 million in the same period of 2024. The effective tax rate in the current period was primarily driven by the level of pre-tax loss and non-deductible transaction costs.

**Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024** 

Equipment rental revenue increased $125 million, or 8%, during the first half of 2025 reflecting an increase in average OEC on rent, which includes the impact of second half 2024 acquisitions and the June 2025 acquisition of H&E. On a pro forma basis including the standalone, pre-acquisition results of Otay and H&E, equipment rental revenue decreased 3.0% year-over-year. Acquisition disruption prior to closing with respect to H&E's operations contributed to the decline in addition to ongoing moderation in certain local markets where H&E's customer base was heavily concentrated.

Sales of rental equipment increased $77 million, or 57%, during the first half of 2025 when compared to the first half of 2024 as we increased the volume of sales in line with our fleet rotation planning to improve the equipment mix and manage fleet age. The margin on sales of rental equipment was 23% in 2025 compared to 32% in 2024. The decrease in margin on sale of rental equipment in 2025 resulted from continued normalization of used equipment pricing in the market.

Direct operating expenses in the first half of 2025 increased $73 million, or 12%, when compared to the first half of 2024. Direct operating expenses were 43.9% of equipment rental revenue in 2025, compared to 42.7% in the prior-year period. 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 facilities expense, maintenance and fuel. Total company facilities expense increased $20 million as we have added more locations through acquisitions and opening greenfield locations, maintenance expense increased $17 million as total fleet size has increased, and fuel increased $7 million.

Depreciation of rental equipment increased $42 million, or 13%, during the first half of 2025 when compared to the first half of 2024 due to an increase in average fleet size primarily the result of the H&E acquisition. Non-rental depreciation and amortization increased $19 million, or 32%, 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 $16 million, or 7%, in the first half of 2025 when compared to the first half of 2024. Selling, general and administrative expenses were 15.2% and 15.4% of equipment rental revenue in 2025 compared to 2024, respectively. The improvement as a percent of equipment rental revenue was primarily related to initial cost synergies obtained through 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.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

Transaction expenses increased $141 million during the first half of 2025 when compared to the prior year 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 consulting and legal fees.

Interest expense, net increased $24 million, or 19%, during the first half of 2025 when compared with the first half of 2024 due to increased borrowings of approximately $4.4 billion to fund the H&E acquisition at a weighted average effective interest rate of 6.8%.

Loss on assets held for sale was $49 million during the first half of 2025 to adjust the carrying value of Cinelease net assets to its fair value less estimated costs to sell.

Income tax benefit was $1 million during the first half of 2025 compared to a provision of $39 million in the same period of 2024. The effective tax benefit in the current period was primarily driven the level of pre-tax loss and non-deductible transaction costs.

***LIQUIDITY AND CAPITAL RESOURCES***

Our primary uses of liquidity include the payment of operating expenses, purchases of rental equipment to be used in our operations, servicing of debt, funding acquisitions, payment of dividends, and share repurchases. Our primary sources of funding are operating cash flows, cash received from the disposal of equipment and borrowings under our debt arrangements. As of June 30, 2025, we had approximately $8.3 billion of total nominal indebtedness outstanding.

Our liquidity as of June 30, 2025 consisted of cash and cash equivalents of $53 million and unused commitments of approximately $1.6 billion under our New ABL Credit Facility and AR Facility (together, the "Facilities"). See "Borrowing Capacity and Availability" below for further discussion. Our practice is to maintain sufficient liquidity through cash from operations and our Facilities to mitigate the impacts of any adverse financial market conditions on our operations. 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.

In conjunction with the acquisition of H&E, we issued new debt consisting of $2.8 billion in senior unsecured notes, 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. The combined weighted average interest rate on the new debt instruments at June 30, 2025 was 6.8%. The term loan facility requires quarterly payments in an aggregate amount equal to 1.00% per annum beginning in December 2025, with the balance due at the maturity of the facility in June 2032. The remaining debt instruments issued during the quarter do not have any principal payment requirements prior to their maturity dates in 2030 and 2033. See Note 9, "Debt" included in Part I, Item 1 "Financial Statements" of this Report for more information.

**Cash Flows**

Significant factors driving our liquidity position include cash flows generated from operating activities and capital expenditures. Historically, we have generated and expect to continue to generate positive cash flow from operations. Our ability to fund our capital needs will be affected by our ongoing ability to generate cash from operations and access to capital markets.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

The following table summarizes the change in cash and cash equivalents for the periods shown (in millions):

---

| | | | |
|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** | **$ Change** |
| **Cash provided by (used in):** |  |  |  |
| &nbsp;&nbsp;Operating activities | $412 | $558 | $(146) |
| &nbsp;&nbsp;&nbsp;Investing activities | (4560) | (700) | (3860) |
| &nbsp;&nbsp;&nbsp;Financing activities | 4118 | 141 | 3977 |
| Effect of exchange rate changes |  |  |  |
| &nbsp;&nbsp;**Net change in cash and cash equivalents** | $**(30)** | $**(1)** | $**(29)** |

---

***Operating Activities***

During the six months ended June 30, 2025, we generated $146 million less cash from operating activities compared with the same period in 2024. The decrease was primarily related to decreased profitability driven by transaction expenses incurred and the timing of payments on accounts payable and accrued liabilities.

***Investing Activities***

Cash used in investing activities increased $3,860 million during the six months ended June 30, 2025 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. Generally, we rotate our equipment and manage our fleet of rental equipment in line with customer demand and continue to invest in our information technology, service vehicles and facilities. Changes in our net capital expenditures are described in more detail in the "Capital Expenditures" section below. Acquisition expenditures of $4,251 million were related to the cash portion of the H&E acquisition.

***Financing Activities***

Financing cash flows increased $3,977 million during the six months ended June 30, 2025 when compared with the prior-year period. Financing activities primarily represents our changes in debt. During the current period, we issued $2.75 billion in senior unsecured notes, a $750 million term loan facility and borrowed $3,361 million on our revolving lines of credit and securitization which were used primarily to fund the acquisition of H&E and invest in rental equipment. This was offset by repayments of $2,645 million on the prior revolving line of credit through borrowings on the new revolving line of credit and through operations. Net borrowings in the prior year period were $593 million.

In order to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may from time to time repurchase our debt, including our notes, bonds, loans or other indebtedness, in privately negotiated, open market or other transactions and upon such terms and at such prices as we may determine. We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity and prospects for future access to capital. The repurchases may be material and could relate to a substantial proportion of a particular class or series, which could reduce the trading liquidity of such class or series.

**Capital Expenditures**

Our capital expenditures relate largely to purchases of rental equipment, with the remaining portion representing purchases of property, equipment, and information technology. The table below sets forth the capital expenditures related to our rental equipment and related disposals for the periods noted (in millions).

---

| | | |
|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** |
| Rental equipment expenditures | $421 | $468 |
| Disposals of rental equipment | (183) | (125) |
| &nbsp;&nbsp;**Net rental equipment expenditures** | $**238** | $**343** |

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

Net capital expenditures for rental equipment decreased $105 million during the six months ended June 30, 2025 compared to the same period in 2024. As the supply chain constraints have eased, our rental equipment expenditures have returned to taking deliveries and disposing of equipment in line with our normal seasonal cadence, while we continue to optimize our fleet by investing in growth markets as part of our long-term capital expenditure plans.

**Borrowing Capacity and Availability**

Our Facilities provide our borrowing capacity and availability. 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. 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"). 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. 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 New ABL Credit Facility. None of such assets are available to satisfy the claims of our general creditors. See Note 11, "Debt" to the notes to our consolidated financial statements included in Part II, Item 8 "Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2024, and Note 9, "Debt" included in Part I, Item 1 "Financial Statements" of this Report for more information.

With respect to the Facilities, we refer to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the Facilities (i.e., the amount of debt we could borrow assuming we possessed sufficient assets as collateral) less the principal amount of debt then-outstanding under the Facility. We refer to "Availability Under Borrowing Base Limitation" as the lower of Remaining Capacity or the Borrowing Base less the principal amount of debt then-outstanding under the Facility (i.e., the amount of debt we could borrow given the collateral we possess at such time).

As of June 30, 2025, the following was available to us (in millions):

---

| | | |
|:---|:---|:---|
| | **Remaining<br>Capacity** | **Availability Under<br>Borrowing Base<br>Limitation** |
| New ABL Credit Facility | $1562 | $1562 |
| AR Facility | 43 | 16 |
| &nbsp;&nbsp;&nbsp;**Total** | $**1605** | $**1578** |

---

As of June 30, 2025, $49 million of standby letters of credit were issued and outstanding, none of which have been drawn upon. The New ABL Credit Facility had $201 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.

**Covenants**

Our New ABL Credit Facility, our AR Facility and our 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.

Under the terms of our New ABL Credit Facility, our AR 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. As of June 30, 2025, the appropriate levels of liquidity have been maintained, therefore this financial maintenance covenant is not applicable.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)**

At June 30, 2025, Herc Holdings' balance sheet was substantially identical to that of Herc, with the exception of the debt held by Herc Holdings (Notes and New ABL Credit Facility) and certain components of shareholders equity. For the three and six months ended June 30, 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.

Additional information on the terms of our Notes, Prior ABL Credit Facility, and AR Facility is included in Note 11, "Debt" to the notes to our consolidated financial statements included in Part II, Item 8 "Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2024. For a discussion of the risks associated with our indebtedness, see Part I, Item 1A "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2024.

**Dividends**

On May 16, 2025, we declared a quarterly dividend of $0.70 per share to record holders as of May 30, 2025, with payment date of June 13, 2025. The declaration of dividends on our common stock is discretionary and will be determined by our board of directors in its sole discretion and will depend on our business conditions, financial condition, earnings, liquidity and capital requirements, contractual restrictions and other factors. The amounts available to pay cash dividends are restricted by our debt agreements.

***OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS***

As of June 30, 2025, there have been no material changes to our indemnification obligations as disclosed in Note 17, "Commitments and Contingencies" in our Annual Report on Form 10-K for the year ended December 31, 2024. For further information, see the discussion on indemnification obligations included in Note 13, "Commitments and Contingencies" in Part I, Item 1 "Financial Statements" of this Report.

For information concerning contingencies, see Note 13, "Commitments and Contingencies" in Part I, Item 1 "Financial Statements" of this Report.

***RECENT ACCOUNTING PRONOUNCEMENTS***

For a discussion of recent accounting pronouncements, see Note 2, "Basis of Presentation and Significant Accounting Policies" in Part I, Item 1 "Financial Statements" of this Report.

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

We are exposed to a variety of market risks, including the effects of changes in interest rates (including credit spreads), foreign currency exchange rates, and fluctuations in fuel prices. We manage our exposure to these market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Derivative financial instruments are viewed as risk management tools and have not been used for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage our exposure to counterparty nonperformance on such instruments.

As of June 30, 2025, there has been no material change in the information reported under Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," in our Annual Report on Form 10-K for the year ended December 31, 2024.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 4.&nbsp;&nbsp;&nbsp;&nbsp;CONTROLS AND PROCEDURES**

**Evaluation of Disclosure Controls and Procedures**

Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined under Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

On June 2, 2025, we completed the acquisition of H&E. We are in the process of evaluating the existing controls and procedures of H&E and integrating H&E into our internal control over financial reporting. In accordance with SEC guidance, companies are permitted to exclude an acquired business from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company, and we have excluded the H&E acquisition from our evaluation of disclosure controls and procedures as of and for the six months ended June 30, 2025.

**Changes in Internal Control Over Financial Reporting**

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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<u>[**Table of Contents**](#i2e209a5a0c394877909b301773e21126_7)</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**HERC HOLDINGS INC. AND SUBSIDIARIES**

**PART II—OTHER INFORMATION** 

**ITEM 1.&nbsp;&nbsp;&nbsp;&nbsp;LEGAL PROCEEDINGS**

For a description of certain pending legal proceedings see Note 13, "Commitments and Contingencies" to the notes to our condensed consolidated financial statements in Part I, Item 1 "Financial Statements" of this Report.

**ITEM 1A.&nbsp;&nbsp;&nbsp;&nbsp;RISK FACTORS**

Except as set forth below, there have been no material changes to our risk factors from those previously disclosed under Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024.

***We may fail to realize all of the anticipated benefits of the acquisition of 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 Herc and H&E. 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. 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.

***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. 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. 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.

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. These risks and uncertainties could adversely impact our business, financial condition and operating results, and include, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to minimize the diversion of management attention from our ongoing business concerns during the process of integration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to retain the service of key management and other key personnel of both us and H&E;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to preserve customer and other important relationships and resolve potential conflicts that may arise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the risk that certain customers will opt to discontinue business with us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the risk that H&E may have liabilities that we failed to or were unable to discover in the course of performing due diligence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the risk that integrating H&E into our business may be more difficult, costly or time-consuming than anticipated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

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**HERC HOLDINGS INC. AND SUBSIDIARIES**

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. 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.

**ITEM 2.&nbsp;&nbsp;&nbsp;&nbsp;UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS** 

**Share Repurchase Program** 

In March 2014, we announced a $1 billion share repurchase program (the "Share Repurchase Program"), which replaced an earlier program. The Share Repurchase Program permits us to purchase shares through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. We are not obligated to make any repurchases at any specific time or in any specific amount and our repurchases may be subject to certain predetermined price/volume guidelines, set from time-to-time, by our board of directors. The timing and extent to which we repurchase shares will depend upon, among other things, strategic priorities, market conditions, share price, liquidity targets, contractual restrictions, regulatory requirements and other factors. Share repurchases may be commenced or suspended at any time or from time-to-time, subject to legal and contractual requirements, without prior notice. There were no share repurchases during the six months ended June 30, 2025. As of June 30, 2025, the approximate dollar value that remains available for share purchases under the Share Repurchase Program is $161 million.

**ITEM 5.&nbsp;&nbsp;&nbsp;&nbsp;OTHER INFORMATION**

None.

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**HERC HOLDINGS INC. AND SUBSIDIARIES**

**ITEM 6.&nbsp;&nbsp;&nbsp;&nbsp;EXHIBITS**

---

| | |
|:---|:---|
| **Exhibit<br>Number** | |
| 2.1 | <u>[Agreement and Plan of Merger, dated as of February 19, 2025, by and among H&E Equipment Services, Inc., Herc Holdings Inc. and HR Merger Sub Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Herc Holdings (File No. 001-33139), as filed on February 20, 2025).](https://www.sec.gov/Archives/edgar/data/1364479/000119312525030725/d936893dex21.htm)</u> |
| 3.1.1 | <u>[Amended and Restated Certificate of Incorporation of Herc Holdings (Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K of Hertz Global Holdings, Inc. (File No. 001-33139), as filed on March 30, 2007).](https://www.sec.gov/Archives/edgar/data/1364479/000110465907024236/a07-7330_1ex3d1.htm)</u> |
| 3.1.2 | <u>[Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Herc Holdings, effective as of May 14, 2014 (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc. (File No. 001-33139), as filed on May 14, 2014).](https://www.sec.gov/Archives/edgar/data/1364479/000110465914038718/a14-12810_1ex3d1.htm)</u> |
| 3.1.3 | <u>[Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Herc Holdings, dated June 30, 2016 (reflecting the registrant's name change to "Herc Holdings Inc.") (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Herc Holdings (File No. 001-33139), as filed on July 6, 2016).](https://www.sec.gov/Archives/edgar/data/1364479/000110465916131328/a16-14543_1ex3d1.htm)</u> |
| 3.1.4 | <u>[Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Herc Holdings, dated June 30, 2016 (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Herc Holdings (File No. 001-33139), as filed on July 6, 2016).](https://www.sec.gov/Archives/edgar/data/1364479/000110465916131328/a16-14543_1ex3d2.htm)</u> |
| 3.2 | <u>[Amended and Restated By-Laws of Herc Holdings Inc., effective May 11, 2023 (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Herc Holdings Inc. (File No. 001-33139), as filed on May 15, 2023)](https://www.sec.gov/Archives/edgar/data/1364479/000136447923000050/hercholdingsby-lawsmay1120.htm)</u>. |
| 4.1 | <u>[Indenture (including the forms of Notes), dated as of June 2, 2025, among Herc Holdings Escrow, Inc., Herc Holdings Inc., the subsidiary guarantors party thereto, and Truist Bank (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Herc Holdings Inc. (File No. 001-33139), as filed on June 2, 2025).](https://www.sec.gov/Archives/edgar/data/1364479/000119312525133360/d943577dex41.htm)</u>. |
| 10.1 | <u>[Amended and Restated Credit Agreement, dated as of June 2, 2025, among Herc Holdings Inc., Herc Rentals Inc., Matthews Equipment Limited, certain other subsidiaries of Herc Holdings Inc., JPMorgan Chase Bank, N.A. as agent, swingline lender and letter of credit issuer, Credit Agricole Corporate and Investment Bank, Wells Fargo Bank, National Association, as co-syndication agents and, together with MUFG Bank, Ltd., PNC Bank, National Association, Truist Bank, Capital One, National Association, ING Capital LLC and TD Bank, N.A., as joint lead arrangers and joint bookrunners and the other financial institutions party thereto from time to time (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Herc Holdings Inc. (File No. 001-33139), as filed on June 2, 2025).](https://www.sec.gov/Archives/edgar/data/1364479/000119312525133360/d943577dex101.htm)</u> |
| 10.2 | <u>[Amended and Restated U.S. Guarantee and Collateral Agreement, dated as of June 2, 2025, made by Herc Holdings Inc. and certain subsidiaries from time to time in favor of JPMorgan Chase Bank, N.A. as agent (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Herc Holdings Inc. (File No. 001-33139), as filed on June 2, 2025).](https://www.sec.gov/Archives/edgar/data/1364479/000119312525133360/d943577dex102.htm)</u> |
| 10.3 | <u>[Amended and Restated Canadian Guarantee and Collateral Agreement, dated as of June 2, 2025, made by Matthews Equipment Limited and certain subsidiaries from time to time in favour of JPMorgan Chase Bank, N.A. as agent (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of Herc Holdings Inc. (File No. 001-33139), as filed on June 2, 2025).](https://www.sec.gov/Archives/edgar/data/1364479/000119312525133360/d943577dex103.htm)</u> |
| 10.4 | <u>[Credit Agreement, dated as of June 2, 2025, among Herc Holdings Inc., certain subsidiaries of Herc Holdings Inc., Wells Fargo Bank, National Association as administrative agent, Wells Fargo Securities, LLC as lead arranger and lead bookrunner, Crédit Agricole Corporate and Investment Bank, JPMorgan Chase Bank, N.A., BMO Capital Markets Corp., Capital One, National Association, MUFG Bank, Ltd., ING Capital LLC, PNC Capital Markets LLC, TD Securities (USA) LLC, Goldman Sachs Bank USA, Regions Capital Markets, and Truist Securities, Inc. as joint lead arrangers and joint bookrunners and the other financial institutions party thereto from time to time (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of Herc Holdings Inc. (File No. 001-33139), as filed on June 2, 2025).](https://www.sec.gov/Archives/edgar/data/1364479/000119312525133360/d943577dex104.htm)</u> |
| 10.5 | <u>[U.S. Guarantee and Collateral Agreement, dated as of June 2, 2025, made by Herc Holdings Inc. and certain subsidiaries from time to time in favor of Wells Fargo Bank, National Association as agent (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K of Herc Holdings Inc. (File No. 001-33139), as filed on June 2, 2025).](https://www.sec.gov/Archives/edgar/data/1364479/000119312525133360/d943577dex105.htm)</u> |
| 10.6 | <u>[Canadian Guarantee and Collateral Agreement, dated as of June 2, 2025, made by Matthews Equipment Limited and certain subsidiaries from time to time in favor of Wells Fargo Bank, National Association as agent (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K of Herc Holdings Inc. (File No. 001-33139), as filed on June 2, 2025).](https://www.sec.gov/Archives/edgar/data/1364479/000119312525133360/d943577dex106.htm)</u> |
| 31.1\* | <u>[Certification of the Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 of 2002](herc2025q2-exhibit311.htm)</u> |
| 31.2\* | <u>[Certification of the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002](herc2025q2-exhibit312.htm)</u> |
| 32.1\*\* | <u>[18 U.S.C. Section 1350 Certifications of Principal Executive Officer and the Principal Financial Officer](herc2025q2-exhibit321.htm)</u> |
| 101.INS\* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |

---

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**HERC HOLDINGS INC. AND SUBSIDIARIES**

---

| | |
|:---|:---|
| **Exhibit<br>Number** | |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

_______________________________________________________________________________

\*Filed herewith

\*\*Furnished herewith

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**HERC HOLDINGS INC. AND SUBSIDIARIES**

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
| Date: | July 29, 2025 | HERC HOLDINGS INC.<br>(Registrant) | HERC HOLDINGS INC.<br>(Registrant) |
|  |  | By: | /s/ MARK HUMPHREY |
|  |  |  | Mark Humphrey<br>*Senior Vice President and Chief Financial Officer* |

---

## Exhibit 31.1

**EXHIBIT 31.1**

**CERTIFICATIONS**

**CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER**

I, Lawrence H. Silber, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2025 (this "report") of Herc Holdings Inc. (the "registrant");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | | |
|:---|:---|:---|:---|
| Date: | July 29, 2025 |  |  |
|  |  | By: | /s/ LAWRENCE H. SILBER |
|  |  |  | Lawrence H. Silber<br>Chief Executive Officer, President and Director (Principal Executive Officer) |

---

## Exhibit 31.2

**EXHIBIT 31.2**

**CERTIFICATIONS**

**CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER**

I, Mark Humphrey, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2025 (this "report") of Herc Holdings Inc. (the "registrant");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | | |
|:---|:---|:---|:---|
| Date: | July 29, 2025 |  |  |
|  |  | By: | /s/ MARK HUMPHREY |
|  |  |  | Mark Humphrey<br>Senior Vice President and Chief Financial Officer (Principal Financial Officer) |

---

## Exhibit 32.1

**EXHIBIT 32.1**

**18 U.S.C. SECTION 1350 CERTIFICATIONS OF PRINCIPAL EXECUTIVE AND THE PRINCIPAL FINANCIAL OFFICER**

In connection with the filing of this quarterly report on Form 10-Q of Herc Holdings Inc. (the "Company") for the quarterly period ended June 30, 2025 with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | | |
|:---|:---|:---|:---|
| Date: | July 29, 2025 |  |  |
|  |  | By: | /s/ LAWRENCE H. SILBER |
|  |  |  | Lawrence H. Silber<br>Chief Executive Officer, President and Director (Principal Executive Officer) |

---

---

| | | | |
|:---|:---|:---|:---|
| Date: | July 29, 2025 |  |  |
|  |  | By: | /s/ MARK HUMPHREY |
|  |  |  | Mark Humphrey<br>Senior Vice President and Chief Financial Officer (Principal Financial Officer) |

---

<br>