HRI

Herc Holdings is an equipment-rental operator in the middle of a transformational, debt-financed acquisition. The balance sheet tells the story: total assets jumped 74.9% to $13.8B, total liabilities surged 82.5% to $11.8B, and shares outstanding rose 17.3% — the signature of a large acquisition funded with both debt and equity. The reported revenue line of $862M (+45.6%) and the collapse in net income to just $1.00M (EPS $0.03, down 99.5%) reflect acquisition, integration and financing costs swamping the operating result in the transition year.

Underneath the noisy GAAP earnings, the rental business remains a strong cash generator: operating cash flow was $1.08B against $157M of capex, and the company sustained its dividend ($87M, +13%). That cash flow is what makes the leverage serviceable. But leverage is now the dominant risk — liabilities/equity stands at 6.07x against a $1.95B equity base, with only $52M cash, so the deleveraging path and the realization of acquisition synergies will determine the equity outcome.