Herc Holdings at Morgan Stanley Conference: Strategic Growth and Challenges

On Thursday, 11 September 2025, Herc Holdings Inc. (NYSE:HRI) presented at Morgan Stanley’s 13th Annual Laguna Conference, providing a strategic overview of its market position and future directions. The discussion highlighted Herc’s robust growth strategy through fleet investments and strategic acquisitions, while acknowledging challenges such as market softness in local areas and the need for interest rate cuts to spur growth.

Key Takeaways

• Herc is integrating H&E Equipment Services Inc., expecting 50% of $125 million in cost synergies by year-end.
• The company is focusing on deleveraging, aiming for a leverage ratio of 2 to 3 times by 2027.
• Herc plans to expand its specialty fleet to 25% of the total, enhancing its market offerings.
• Interest rate cuts are deemed necessary to stimulate local market growth.
• Herc is leveraging its scale in top metropolitan areas to capture market opportunities.

Financial Results

• Cost Synergies: Herc aims to achieve 50% of the targeted $125 million cost synergy run rate from the H&E acquisition by year-end.
• Leverage Ratio: The goal is to return to a leverage ratio of 2 to 3 times by 2027, with a focus on deleveraging.
• Specialty Fleet: Currently at 16%, Herc plans to increase its specialty fleet to 20% in the near term and 25% in the long term.
• Purchasing Power: Transitioning H&E’s supply base to Herc’s suppliers could lead to savings of 500 basis points or more.
• Capital Allocation: Priority is on deleveraging over tuck-in acquisitions and greenfield projects until leverage targets are met.

Operational Updates

• H&E Integration: Full ERP integration of H&E’s 165 locations is set for completion by Monday, marking a significant milestone.
• Attrition Recapture: Herc has recaptured lost business post-acquisition, regaining customers and personnel.
• Fleet Efficiency: Focus remains on balancing and optimizing the combined fleets of Herc and H&E.
• Specialty Expansion: The acquisition will increase specialty locations from 150 to nearly 200.
• Geographic Focus: Herc is concentrating efforts on the top 100 metropolitan statistical areas (MSAs) to expand its portfolio.
• Technology Adoption: Investments in battery storage and load banks aim to provide more efficient and eco-friendly solutions.

Future Outlook

• Revenue Synergies: Increased synergies expected as customers access a wider range of products and services.
• Fleet Growth: Aiming for 25% specialty equipment mix to enhance yield and margins.
• Market Share: Focused on top 100 MSAs without striving to be the number two industry player.
• Mega Project Pipeline: Visibility into a robust pipeline for the next 30 to 36 months ensures stable demand.
• Interest Rate Impact: Further cuts are anticipated to drive local market growth and labor shifts.

Q&A Highlights

• Competitive Landscape: Herc recognizes EquipmentShare as a regional player in a fragmented market.
• Pricing Pressure: No specific comments on competitors’ pricing strategies.
• Interest Rate Sensitivity: Additional 75 basis points in cuts are estimated to stimulate growth, with a lag of 6 to 18 months.
• Mega Project Durations: These projects account for 10% of fleet activity, providing demand visibility.
• Labor Market Dynamics: Rate cuts may shift skilled labor back to local markets, potentially raising labor costs for mega projects.

For further details, readers are encouraged to refer to the full transcript below.

Full transcript - Morgan Stanley’s 13th Annual Laguna Conference:

Joe Kissler, Analyst, Morgan Stanley: Funny, yeah. Great. Okay, we’ll get started. Good to see everybody. My name is Joe Kissler with Morgan Stanley. I’m joined with Larry Silber, President and CEO of Herc Holdings Inc., Mark Humphrey, CFO, and Aaron Birnbaum, the COO. Gentlemen, thanks for being here. Larry, you want to start with a few opening comments?

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah, great. Thanks, Joe, and thanks everybody for joining us today. Glad to see everybody. A little bit, quickly about Herc Rentals, for those of you that don’t know us. We’ve been in business, this is our 60th anniversary, as a company in the equipment rental industry, so the oldest public company in the equipment rental industry. We’ve been an independent public company now for over nine years. We’re now a team of over 10,000 employees, over 625 locations across 46 states and five Canadian provinces. We’re serving an addressable market of about $87 billion and growing in North America. Of course, the industry does have long-term attractive dynamics with the continued switch from ownership to rental, a secular switch from the ownership of equipment to rental. We’re investing to sustain a profitable growth trend that we’ve been on and executing a very strong growth strategy.

We’ve had above-market growth through both investments in fleet, new greenfield openings, a movement into the specialty marketplace, and ultimately with M&A transactions, completing over 50 transactions in the last four and a half years, adding, up until the most recent one, 113 locations. With the most recent transaction that we closed on, which was H&E Equipment Services Inc. in June, we added about 165 locations to our business. We operate primarily in the top 100 MSAs in North America, and we certainly know how to allocate capital to drive value in our business and how to successfully integrate acquisitions, this most recent one, I think, being number 53 on our acquisition trail. We’re leveraging a very proven playbook to integrate the H&E Equipment Services Inc. acquisition of June the 2nd. At the end of this weekend, we will be completely integrated.

All 165 locations will be on the Herc platform as of this coming Monday morning and operating as one company. We do have a very diverse and flexible business model with diverse end markets. No one customer represents more than 3% of our business. With our focus on top MSAs with a million people or more, it reduces the risk we become less recession activity. We’re more recession-resilient in terms of what we do. We have a very flexible fleet management model, provides opportunity for organic growth and the growth of new businesses and new products and new specialty businesses within that. Our specialty business has become an expertise for us. We’re recognized in the marketplace as one of the leaders in the specialty platform, and we’re looking to continue to grow that, and the H&E Equipment Services Inc.

acquisition will give us the ability to grow that without adding a lot more, really, bricks and mortar and any more fixed cost capital. We are disciplined in our investment approach and we’re looking to make sure that we’re returning value to shareholders and being profitable as we go along. With that, as an opening, maybe I’ll let.

Joe Kissler, Analyst, Morgan Stanley: Yeah, excellent. Thank you, Larry. Why don’t we start a bit on the macro side of things? It seems like we’ve got a little bit of a tale of two cities out there. Local markets are soft, but national accounts, mega projects remain pretty resilient. Can you share a bit on what you guys are seeing specifically in your own business in your own markets?

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah, I would say, look, I think we, what you said is exactly right. Local markets have been soft. I don’t think they’re getting any softer. I think they have stabilized at whatever level we’re operating now. Those are primarily driven, those local markets, by commercial activity that’s driven by interest rates. With the prospect of some pending interest rate cuts over the course of the balance of the year, that should begin to spur on some of that activity. Most of that activity is going to have a gestation period of, you know, minimum of 6 to 12 to 18 months, depending upon where they are in the planning and preparation of that project. The market on the local basis is stable at the moment. We’re not seeing any deterioration.

At the same time, I wouldn’t say that, you know, there’s anything other than the Dodge Momentum Index that’s telling us that there’s activity about to spur on and that we should see some improvement there. On the opposite side of that, our big national account business, the mega project business, is going very strong. We have a great position in the mega project markets. We have said that we want to participate in about 10% to 15% of those projects. We are doing that. The acquisition of H&E Equipment Services Inc. certainly gives us more scale and more capability to address those mega projects that we’ve been very successful to date on. With that, you know, we’re moving along. Specialty business is growing, a growing portion, as I mentioned earlier, and allowing us to penetrate those large mega projects as well.

Joe Kissler, Analyst, Morgan Stanley: Is there anything specifically as it relates to geographies where you’re seeing outsized strength, any areas where there’s softness that have to do with some of the recent trade policies or any of the other sort of atmospherics out there that are impacting the business or market negatively?

Larry Silber, President and CEO, Herc Holdings Inc.: The overall market is kind of moderating at the local level. The activity is definitely strongest where there’s less regulation, less restrictions to develop projects. For example, the mega project arena where you see whether it’s data centers or LNG plants or stadiums, it used to be like all the EV, auto manufacturing, battery type work. Those really were going into markets where the restrictions, the regulations were a little bit more friendly. These days, you see those projects, the private kind of funding going towards Texas and the Gulf and the Southeast. Markets such as the West Coast are having a little bit more trouble garnering those types of projects. Therefore, they’re really relying more on the local market activity. Although it’s moderated, you drive around, you see projects everywhere. It’s not as robust as some of those markets that are getting those big mega projects.

With those projects, you get a whole influx of infrastructure activity. That’s really what you’re seeing. It’s not like, geography-wise, you see differences along the way.

Joe Kissler, Analyst, Morgan Stanley: You talked a little bit about the local kind of weakness in the local markets, and maybe there’ll be some stimulation if rates decrease. What is the primary sort of like function in the local markets? Is it a resi issue or how would you describe it?

Larry Silber, President and CEO, Herc Holdings Inc.: No, I don’t. Certainly it will apply to RESI, but we don’t participate really in RESI too much at all, you know. I think it’s really around commercial projects, whether it’s strip malls, whether it’s hotels, whether it’s local things that spur out of some of these mega projects that create the need for additional infrastructure in a market, whether they have to add banks or hospitals or things like that. Certainly on the commercial side, it requires some interest rate reduction where those investors can get an acceptable rate of return once they build that project so they can rent it out at a cap rate that makes sense, right? That’s really where it’s happening.

Joe Kissler, Analyst, Morgan Stanley: Obviously, a lot to talk about from an M&A perspective. H&E Equipment Services Inc. closed in Q2, and I think you said...

Larry Silber, President and CEO, Herc Holdings Inc.: June 2nd.

Joe Kissler, Analyst, Morgan Stanley: Yeah, June 2nd. Your initial comments that you guys have flipped the switch or will flip the switch at the end of this weekend on the final sort of ERP transition and implementation. Talk a little bit about the first few months. How’s it going? What has sort of worked out well versus the underwriting? What’s been more challenging?

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah, look, what we inherited, we had a period from the time early January when United Rentals was the initial suitor. We came in 35 days later, and we didn’t close until June 2. During that period, we had some attrition in the business in terms of people and customers. I think we got down the road and we had to make sure we put a stop to that. We got everything done once we closed, recaptured that business, and put programs in place to recapture that. We’ve been pleasantly surprised with the people, with the facilities, with the customer base that we inherited. Aaron can talk more about some of that customer base that we’ve actually learned from and some things that we’re going to be able to pick up.

Joe Kissler, Analyst, Morgan Stanley: Yeah, the most attractive thing about the acquisition was the scale that we picked up because all of a sudden we got 30% bigger with 160 plus locations. The other thing that was super interesting and is the opportunity is that is the specialty component. At Herc, we had 20% of our fleet dedicated to specialty, which drives a premium dollar yield and margin kind of profile. On the H&E Equipment Services Inc. side, it was only about 3% of their fleet. That’s really where a lot of the synergies will come. The other piece was, kind of talking back to scale, when you talk to whether it’s the H&E Equipment Services Inc.

historical customers or the Herc customers on both sides, they were pleased with the transaction because it gives them more opportunities to use either H&E Equipment Services Inc., if that was the preferred vendor, or Herc with our new scale. We’ve had many instances on the H&E Equipment Services Inc. customer side where, you know, they’ll call their H&E Equipment Services Inc. traditional sales rep and ask, "Hey, you got bought by Herc Rentals. Do you have this product now?" and they can say yes. It’s been pretty powerful. We’ve seen a lot of opportunities with synergy through the third quarter. We’re measuring all that. Now that we’re all going to be on one system as of Monday, the whole organization, you know, we anticipate that to really accelerate.

Can you spend a little bit more time, Aaron, on the synergy point, both from a revenue synergy, which you talked to, you gave the one example there, but also a cost synergy, capital efficiency standpoint? You know, how are you guys trending relative to what you said on announcement? What’s your sort of ultimate expectation there?

Mark Humphrey, CFO, Herc Holdings Inc.: Yeah, I mean, I think from a cost synergy perspective, right? I mean, we had publicized $125 million of cost synergies, effectively over a two-year period. I think that sort of the run rate now is looking more like we’ll probably be 50% of the way there on a run rate basis as we exit this year. I think that has been fast forwarded to some extent, right? You think about people, public company costs, contracts, and the like. Some of that just takes some time to work its way through. We feel really good about sort of where we’re tracking and how that is laying into the financial statements as we work our way into 2026. The capital efficiency side of this really runs to the scale. Going from scaling to scaled in these markets allows for efficiency across the board, which ultimately lands in a capital efficiency play.

You think about the revenue synergies accomplished, cost synergies accomplished, fleet efficiency accomplished. Just being able to say yes more often in these scaled marketplaces leads to a much more efficient capital structure as you work your way forward. We’ve given ourselves and given a high-level guide over a three-year period, and that’s our expectation.

Joe Kissler, Analyst, Morgan Stanley: Mark, on the point of capital, obviously this transaction added a lot of leverage to the balance sheet. How do you think about the near-term deleveraging trajectory, and how does that impact your overall capital allocation strategy over the next, you know, 12 to 24 months?

Mark Humphrey, CFO, Herc Holdings Inc.: Yeah, no, good question. I think from a leverage perspective, we thought we would come out at a 3.8, which is where it came out at. I think that our opinion has not changed. I think as we sort of work our way through, one, the stabilization of the historical customer base that was H&E, plus the revenue synergies, plus the cost synergy attainment that we just talked about, the expectation is that we will be inside of our former two to three times leverage profile by 2027. I think between now and then, the things that we had historically done, which was sort of tuck-in acquisitions and greenfields, those things will be set to the side as we work our way through this.

I think that there’s enough opportunity inside of the 165 branches that we acquired that it will take our efforts and energies to get that right over this next couple of years. I think once inside that two to three times leverage ratio target, then I think we would go back to a similar structure where it’s greenfields and tuck-ins and those sorts of things. Until then, it’s all hands on deck to accomplish what we’ve set out to accomplish.

Joe Kissler, Analyst, Morgan Stanley: Sure. Let’s talk about ops quickly and maybe to dovetail a bit off of what you said, Mark. Maybe talk a bit about the fleet. You guys obviously inherited a lot of OEC with the H&E Equipment Services Inc. transaction. I suspect there’ll be a handful of dispositions that will happen as you right-size the fleet in the markets that you’re in. Talk a little bit about the fleet footprint going forward, you know, GenRent specialty, how you’re thinking about it and what you think, you know, the portfolio looks like a year from now.

Larry Silber, President and CEO, Herc Holdings Inc.: At the moment, you know, going through Q3, since June 2nd and then through Q4, our focus is getting the fleet efficient. It’s balancing the fleet with the two entities. Some of the fleet they had, it prevented us from having to spend our capital on the Herc side knowing it was coming in. We kind of repositioned that capital we would have used on specialty fleet. As we go through into, you look forward, we got some real opportunities. When we announced the deal, we said we had roughly 150 specialty locations in the U.S. With the 160 plus H&E Equipment Services Inc. coming in, we’re going to be able to accelerate that 150 count closer to 200 as we push more of our specialty businesses into those new markets.

In some markets, we’d have two or three specialty operations of the same type without having to add fixed costs to the business. We’re super excited about that. It’ll help fuel kind of the margin expansion. The other thing we realized, we suspected, but once we got hold of the fleet and could benchmark, the purchasing power that we had going forward, we saw that we had even more purchasing power than we would have assumed beforehand. When we have to replace that fleet, we’ll replace it at a cost point that is more advantageous to us, which will continue to help kind of our dollar yield story going forward.

Joe Kissler, Analyst, Morgan Stanley: Aaron, the combined fleet’s around 20% specialty, maybe a touch below that. How do you think about that going forward, both from an overall percentage of the total fleet and within the specialty categories, where you’re focused, where you guys have the right to win? Can you spend a minute there?

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah. Going into the transaction, about 20% of the Herc fleet was what we would call specialty. When we talk about specialty, we’ll talk about it in the terms of the types of products: power generation, industrial pumps, climate control, flooring products, trench products, and then what we call pro control tools, which are smaller tools and industrial tools. Once the transaction closed, our 20% went to 16%, just because that wasn’t something that H&E Equipment Services Inc. really had developed. I think I mentioned their profile was about 3% of their fleet. We’ll continue to walk that back up to 20%. Longer term, the number is 25% for us. As we move that along, that will continue to help our dollar yield and our margin profile.

Joe Kissler, Analyst, Morgan Stanley: Great. This transaction was obviously important to help bridge the gap to, you know, kind of number one, number two in the sector, and there’s sort of a dichotomy when you get beyond the top couple of names in the sector. How do you think about, you know, your two top competitors today? Obviously, the H&E Equipment Services Inc. deal was a transaction that allowed you guys to achieve a lot of scale to get closer from just a market share standpoint. What else do you think, if you fast forward in the future, Herc Holdings Inc.

needs to do over the next, call it five years, to gain more share, become more relevant with the important, most important customers in the market, so you guys can continue to be in that sort of position where you are today and maybe, you know, become the number two in the years ahead?

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah, look, I don’t know that we need to become number two. It’s okay being big number three and continuing to grow in terms of what we’re doing. Remember, I think our strategy is a bit different than maybe number one or number two. We want to primarily focus on the top 100 MSAs, population centers, a million people or more, and really build out our portfolio of businesses within that market. There’s plenty of white space within those top 100 MSAs to continue to grow share, particularly as we add specialty opportunities. We’re only in a handful of specialty categories today. There’s a whole bunch of other specialty categories that are either in early stages or embryonic stages of moving, having that secular change that General Rental has done over the last 10 years that’ll move from ownership to rental.

It’s a significant opportunity to continue to grow there and continue to grow share as we grow the fleet around our specialty portfolio and build out those top 100 markets.

Joe Kissler, Analyst, Morgan Stanley: What categories within specialty really excite you guys, and where are you hearing from your customers you need to have this asset category and you don’t have it today?

Larry Silber, President and CEO, Herc Holdings Inc.: Customers want solutions, right? They want late model equipment that performs well and that you can solve their problems. Some of the newest products that we’ve been introducing would be battery storage power, as opposed to diesel power. It’s more fuel efficient. There’s no fuel cost and it’s, you know, better on the environment. It’s also very quiet. We’ve been deploying that pretty rapidly. A lot of these larger projects want that type of technology. Another one we’ve been investing in quite a bit for the last couple of years and accelerating at the right time is load banks, which is a product that goes into the data center world to commission a data center when they’re done building it. It’s a really interesting product, and every data center that gets built needs load banks to test and commission. These are specialty products that we’re excited about.

Joe Kissler, Analyst, Morgan Stanley: Aaron, you use the word solutions. I want to ask a question about that. You see that from sort of everyone in the sector, much more, I’d say, technical solutions-oriented sale, complete package for the project at hand. What do you think the sector looks like five years, ten years in the future? Are there a lot more services that are going to be provided from the equipment rental providers? Are there different business models that you think will evolve out of the large providers in the space?

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah, I think where it’s going to go, there’s obviously more room on the market share play, right? Between the three largest providers, it’s 35% of the market. The industry is growing. The secular trend is for more rental, less ownership, and we’ve got a nice little runway. I think the customers, what they’re going to want, the larger the customer, the more solutions they want. They want technology. They want efficiency. Managing fleet is not their core competency. The more you can bring to the table to manage their fleet, keep the uptime on the rental fleet, and sometimes their own fleet that they might have in that environment, is becoming more and more important to them. We’re exploring other solutions in that environment. I think that’s where the industry is moving towards.

Joe Kissler, Analyst, Morgan Stanley: You made the comment that the H&E Equipment Services Inc. deal is going to give you guys more purchasing power. That’s sort of a consistent theme we’ve seen when large transactions have happened in the space. Talk a little bit about your guys’ relationship with your suppliers and the OEMs. Like, you know, how is that relationship? Because that sort of comes out of their pocket, obviously. You guys have become, and your peers around you have become, such a large part of the market and the biggest buyers. Maybe spend some time on how you guys keep that relationship healthy given the dynamics.

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah, I don’t think that it’s going to as much come out of the pocket of our current suppliers because, you know, when you’re as big as we are and as big as our two larger peers are, you’re already pretty much at or near the bottom of their tolerance level. That’s really going to come from where we’re going to transition H&E Equipment Services Inc.’s buys from to our current suppliers. The vast majority of their least most recent purchases in the past couple of years have been from suppliers that wouldn’t traditionally be our suppliers. The opportunity is the OEC costs that they were paying, we’re going to roll them into our OEC costs.

There may be some marginal or incremental benefits, but generally, if you’re adding another hundred units of something or, you know, even another thousand units of something, you’re not going to pick up a lot of significant buying power from our current suppliers. It’s going to be the transition from what their supply base was to our supply base, where we’re going to pick up in many cases 500 basis points or more of improvement in OEC costs along that.

Joe Kissler, Analyst, Morgan Stanley: That makes sense.

Larry Silber, President and CEO, Herc Holdings Inc.: The other benefits around that are we consolidate purchases, our people understand how to repair that equipment. We have better technical support, better product support, better parts availability, quicker turnaround, and a more standardized fleet that’s more fungible across all of our locations.

Joe Kissler, Analyst, Morgan Stanley: Yeah, that makes good sense. Maybe one more question, Mark, and I’m sort of looking in your direction. Maybe remind the group of the 2025 full year guidance, realizing a lot’s going on in the financials as you guys integrate a very large transaction. How do you think about just where the guide is, the achievability of the guide, where we sit in the year, given, you know, the operating environment we’re in and, you know, sort of where you guys have made progress from an integration standpoint?

Mark Humphrey, CFO, Herc Holdings Inc.: Yeah, no, I mean, I think you summed it up well. There’s a lot going on, right? I think that, you know, as you looked through the second quarter and then the guide into the back half of the year, I think a couple of things stand out to me. One, market’s stable. Integration is going as well as we could have anticipated it to go at this point in time. I think that this six months, if you will, this July to December period is extremely important for us to be able to get line of sight into, you know, integration continuing to come along the way that we wanted it to. I think that the view on the macro, and the clarity that that provides here as we work our way into the back half of the year, is also extremely important.

I think, you know, taking all of that into consideration, we’ll be able to provide a much better view as we walk into 2026 with some better answers as we sort of work our way through this back six months.

Joe Kissler, Analyst, Morgan Stanley: Great. Thank you. Maybe look to the crowd if anybody’s got any questions in our last few minutes.

Unidentified speaker: Hi guys. You have a private competitor that is growing very fast and making some noise that they want to achieve a $20 billion fleet. How do you see, are you seeing them in the field? What kind of pricing pressure do you see from these guys?

Larry Silber, President and CEO, Herc Holdings Inc.: I assume you’re referring to EquipmentShare?

Unidentified speaker: Yes.

Larry Silber, President and CEO, Herc Holdings Inc.: Are you referring to? Yeah, look, they’re another regional player. We see a lot of regional players out there. They’re just one of a handful of growing companies, you know, that are of that size or about that size that want to continue to grow. As I think either Aaron or Mark mentioned, the top three players represent about 35% of the rental market, which is the North American rental market, which is a growing market. That means there’s 65%. It’s a big market. Plenty of opportunity for everybody to participate. The market continues to grow. It’ll grow more as you move specialty equipment into the North American market. They’re just another big regional player that has big ambitions, no different than I’m sure we have or United has or Sunbelt has or any of the other big regional players.

Unidentified speaker: Do you see them impacting prices in some regions or not much?

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah, look, I don’t think that’s appropriate for me to comment on any particular competitor’s pricing in the market. We just don’t comment on competitors’ pricing.

Unidentified speaker: Thank you. A quick question. You mentioned earlier that there’s a bifurcation in demand from the smaller, more regional players and the large national accounts and that some of the difficulties in the local accounts have been driven by interest rates. I know there’s a lot of uncertainty as to the cadence and magnitude of rate cuts in the coming years, but by how much do you think the rates need to reset before you see demand really start to pick up in those markets? In the larger, more national mega projects, is there an upside there as well from lower interest rates in the future?

Mark Humphrey, CFO, Herc Holdings Inc.: I’ll take the first part of that. I think that, prior to the rate cuts that occurred in 2024, we had said that we thought that there needed to be about 150 basis points in total cut to sort of spur that local market growth. We received 75 basis points last year, zero up until now. I think that calculus is just, I think that there’s probably, give or take, another 75 basis points of cut necessary to sort of fuel what looks to be a decent-sized momentum sitting underneath it. If you look at Dodge Momentum Index and the like, I think that there’s activity there waiting for the financial elements of that build to make sense before they hit the green light. That would be my take on where, and the velocity of the rate cuts that probably need to occur.

I think, and I think Larry mentioned this earlier, you’re probably then talking at a minimum six months and maybe as long as 12 to 18 to get from, okay, rate cut to a shovel in the ground.

Larry Silber, President and CEO, Herc Holdings Inc.: On the mega part of the question, it is very robust. Right now, we’ve got visibility into the next 30 to 36 months of robust mega activity. If interest rates come in, will it stimulate that arena? It wouldn’t hurt, but I don’t, it’s not needed. Those projects are planned, you know, well in advance. If anything, it probably would refinance some projects, but it’s a robust arena.

Unidentified speaker: Great. Thank you very much.

Joe Kissler, Analyst, Morgan Stanley: Thank you. I think the investor community is sort of trying to balance and figure out this dynamic between rate cuts and then less job creation or job losses. It’s probably a struggle for you, for us. I’m curious to get your view because, you know, there’s so much narrative about rate cuts are good, but maybe they’re being cut for a reason that’s not so good. How are you thinking about that? Do you see job numbers like we had the other day and get concerned, or does that filter into your sort of thought process in terms of how you think about the business over the next 12 to 18 months, or is the primary component rates are going lower and that’s good if you get the, excuse me, additional 75? That’s what we mainly care about.

I know it’s a little convoluted, but it’s kind of a convoluted conversation in the markets happening. I’d love to get your thoughts.

Mark Humphrey, CFO, Herc Holdings Inc.: Yeah, no, I mean, I think certainly a thought-provoking question, right? You’ve got two sides of that, and I don’t, I don’t, in the position that the Fed is in. You know, you’ve got sort of an inflationary pressure discussion on one side, and then you’ve got a slowing labor market discussion on the other side. It seems that, you know, at least the talk track today is there’s more concern over the stalling out on the labor side and therefore, you know, needing rate cuts to ultimately stimulate. I think from our perspective, you know, we would certainly appreciate that rate cut, and that rate cut activity to spur that local growth. I think there’s probably no perfect answer as the marketplace discusses this on the daily, right?

I think from our perspective, we would certainly welcome the rate cut activity and the spurring of growth, particularly as we sit here today.

Larry Silber, President and CEO, Herc Holdings Inc.: Yeah, where I think the labor challenge is, has been, and will continue to be is around skilled workers. You know, whether it’s welders or plumbers or electricians or millwrights or things like that, skilled labor has been the challenge for a long time on these projects, will continue to be a challenge. What I think you’ll see happen, at least from my perspective, is it’ll probably, a rate cut will drive some of that labor back to the local markets and away from the mega projects. It might be the mega projects have more trouble attracting labor, because remember, most of these mega projects are in the middle of nowhere. People are leaving their homes for three, six, nine months, a year at a time, living in the middle of a cornfield or living in the middle of a bayou or living somewhere away from home.

They’re there primarily because there’s nothing in their local market, right? If there’s local market activity, some of that labor might come back to a local market, and then that’ll put some pressure on, you know, probably labor rates for the mega projects.

Joe Kissler, Analyst, Morgan Stanley: I think we need one more quick one.

Unidentified speaker: Hi, with the mega projects, is there a difference in the duration of the contracts that you have for those? How much of the fleet do you think, when all the mega projects are humming and you’re at peak, like how much of your fleet will be allocated towards it?

Larry Silber, President and CEO, Herc Holdings Inc.: You know, it’s really not a large percentage of the fleet activity. It’s 10% or so, so it’s not like we couldn’t absorb that if it started to slow down into the local markets. I’d imagine the timing would be right. As I said, there’s a three-year robust pipeline of mega projects. The way I see it is the local markets are going to come back before that occurs for sure with any kind of interest rate cut. No, not over-levered to mega. It’s just a nice space to create some activity right now when the local markets are more moderated. It allows us to continue to grow. Remember, as these projects age out, that fleet also ages out.

Much of that fleet might get sold off when that project finally completes and ages out, and it gives us the opportunity rather than to replace it, just to age it out and sell it.

Joe Kissler, Analyst, Morgan Stanley: That brings us to time. Gentlemen, thanks for being here. Appreciate your time.

Larry Silber, President and CEO, Herc Holdings Inc.: Thank you.

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