Herc keeps paying down debt, redeems 7.5% notes, 7.75% notes in July

By Devika Patel

Knoxville, Tenn., Aug. 8 – Herc Holdings Inc. plans to keep paying down debt, having redeemed $124 million of notes in July.

“Our strong financial position enabled us to proceed in July with the redemption of $61 million in aggregate principal amount of the 7.5% notes due in 2022 and $63 million of the 7.75% notes due 2024,” senior vice president and chief financial officer Mark Irion said on the company’s second quarter ended June 30 earnings conference call on Wednesday.

“To fund the redemption, we borrowed on our revolving credit facility which is a rate of approximately one-month Libor plus 1.75% and will result in annualized interest savings of $5 million.

“We are continuing to focus on the disciplined financial strategy to reduce leverage and fund organic growth opportunities with our operating cash flow,” Irion said.

The company’s leverage levels are approaching its targeted range.

“I think the leverage is just getting into within our target range and we’ll continue to focus on deleveraging the business over the medium-term,” Irion said

“Our desired range is to be between 2.5x and 3.5x and, as long as the cycle remains robust, we’ll operate towards the upper end of that range and, if there was a cycle shift to happen, we would obviously pay down debt, which would move us down to the lower end of the range in a down cycle,” president and chief executive officer Lawrence H. Silber added on the call.

Adjusted EBITDA increased 14.4% to $152.2 million in the second quarter compared to $133.1 million in the comparable period in 2017.

Cash and cash equivalents were $44 million as of June 30, 2018, compared to $41.5 million as of Dec. 31, 2017.

Free cash flow for the first six months of 2018 was $31.7 million, compared to $29.8 million for the same period in 2017.

The company’s total debt was $2.15 billion as of June 30, 2018, down $27.1 million from Dec. 31, 2017.

Liquidity was $666.1 million as of June 30.

The equipment rental company is based in Bonita Springs, Fla.

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