Business Combinations (Tables)

6 Months Ended

Jun. 30, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Schedule of Purchase Price Allocation and Fair value and Useful Lives

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	1,830
Property and equipment	286
Right-of-use lease assets	567
Customer relationships intangible	1,070
Total identifiable assets acquired	3,998
Current liabilities	172
Operating lease liabilities	567
Finance lease liabilities	7
Deferred tax liabilities	633
Net identifiable assets acquired	2,619
Goodwill	2,211
Net assets acquired	$	4,830


	Otay
Accounts receivable	$	14

Rental equipment	120
Property and equipment	8
Intangibles(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	65
Total identifiable assets acquired	207
Current liabilities	1
Net identifiable assets acquired	206
Goodwill(b)	67
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
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.

Schedule of 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
	Herc		H&E		Total
Historic/pro forma equipment rental revenues	$	870	$	181	$	1,051
Historic/pro forma total revenues	1,002		217		1,219
Historic/combined pretax loss	(46)		(36)		(82)
Pro forma adjustments to consolidated pretax loss:
Impact of fair value adjustments/useful life changes on depreciation(a)			12		12
Intangible asset amortization(b)			(18)		(18)
Interest expense(c)			(41)		(41)
Elimination of historic interest(d)			10		10
Transaction expenses(e)			112		112
Pro forma pretax loss					$	(7)


	Six Months Ended June 30, 2025
	Herc		H&E		Total
Historic/pro forma equipment rental revenue	$	1,609	$	455	$	2,064
Historic/pro forma total revenues	1,863		536		2,399
Historic/combined pretax loss	(54)		(44)		(98)
Pro forma adjustments to consolidated pretax loss:
Impact of fair value adjustments/useful life changes on depreciation(a)			33		33
Intangible asset amortization(b)			(45)		(45)
Interest expense(c)			(104)		(104)
Elimination of historic interest(d)			26		26
Transaction expenses(e)			195		195
Pro forma pretax income					$	7


	Three Months Ended June 30, 2024
	Herc		Otay		H&E		Total
Historic/pro forma equipment rental revenue	$	765	$	19	$	312	$	1,096
Historic/pro forma total revenues	848		20		377		1,245
Historic/combined pretax income	93		1		45		139
Pro forma adjustments to consolidated pretax income:
Impact of fair value adjustments/useful life changes on depreciation(a)			1		18		19
Intangible asset amortization(b)			(3)		(27)		(30)
Interest expense(c)			(4)		(76)		(80)
Elimination of historic interest(d)			2		18		20
Transaction expenses(e)			1		—		1
Pro forma pretax income							$	69


	Six Months Ended June 30, 2024
	Herc		Otay		H&E		Total
Historic/pro forma equipment rental revenue	$	1,484	$	36	$	608	$	2,128
Historic/pro forma total revenues	1,652		38		748		2,438
Historic/combined pretax income	174		3		81		258
Pro forma adjustments to consolidated pretax income:
Impact of fair value adjustments/useful life changes on depreciation(a)			3		35		38
Intangible asset amortization(b)			(5)		(54)		(59)
Interest expense(c)			(9)		(154)		(163)
Elimination of historic interest(d)			3		36		39
Transaction expenses(e)			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.