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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 10-Q
☒
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
For the quarterly period ended September 30, 2017
OR
o☐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)
Delaware20-3530539
Delaware
(State or other jurisdiction of

incorporation or organization)
20-3530539
(I.R.S. Employer

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 classTrading Symbol(s)Name of exchange on which registered
 Common Stock, par value $0.01 per share HRINew 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 x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x☒No o

☐
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 filerx☒Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting companyo☐
Accelerated filer ☐Emerging growth companyo☐
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. o☐

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

Indicate the numberAs of April 19, 2024, there were 28,368,574 shares outstanding of each of the issuer's classes ofregistrant's common stock, as of the latest practicable date.
$0.01 par value, outstanding.
ClassShares Outstanding at November 3, 2017
Common Stock, par value $0.01 per share28,370,805


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HERC HOLDINGS INC. AND SUBSIDIARIES
TABLE OF CONTENTS

Page
1
ITEM 1.
12
Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2024 and December 31, 20162023
12
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017March 31, 2024 and 20162023
23
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017March 31, 2024 and 20162023
34
Condensed Consolidated StatementStatements of Changes in Equity for the NineThree Months Ended September 30, 2017March 31, 2024 and 2023
45
Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2024 and 20162023
56
78
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
2420
ITEM 3.
3326
ITEM 4.
3426
ITEM 1.
3627
ITEM 1A.
3627
ITEM 2.
3627
ITEM 5.
3627
ITEM 6.
3728
3829


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HERC HOLDINGS INC. AND SUBSIDIARIES










CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the period ended March 31, 2024 (this "Report") includes "forward-looking statements," as that term is defined by the federal securities laws. Forward-looking statements include statements concerning our business plans and strategy, projected profitability, performance or cash flows, future capital expenditures, our growth strategy, including our ability to grow organically and through M&A, anticipated financing needs, business trends, our capital allocation strategy, liquidity and capital management, exploring strategic alternatives for Cinelease, including the timing of the review process, the outcome of the process and the costs and benefits of the process, and other information that is not historical information. 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.

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, 2023 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.

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PART I—FINANCIAL INFORMATION

ITEM l.    FINANCIAL STATEMENTS


HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
September 30,
2017		 December 31, 2016
March 31,
2024		March 31,
2024		December 31,
2023
ASSETS(Unaudited)  ASSETS(Unaudited) 
Cash and cash equivalents$19.1
 $24.0
Restricted cash and cash equivalents7.1
 7.0
Receivables, net of allowances of $31.8 and $24.9, respectively347.9
 293.3
Taxes receivable4.4
 7.4
Inventory26.7
 24.1
Prepaid and other current assets19.2
 15.9
Receivables, net of allowances of $17 and $20, respectively
Other current assets
Assets held for sale
Total current assets424.4
 371.7
Revenue earning equipment, net2,465.5
 2,390.0
Rental equipment, net
Property and equipment, net287.3
 272.0
Right-of-use lease assets
Intangible assets, net284.4
 303.9
Goodwill91.1
 91.0
Other long-term assets36.2
 34.7
Assets held for sale
Total assets$3,588.9
 $3,463.3
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY  
Current maturities of long-term debt$17.2
 $15.7
Current maturities of long-term debt and financing obligations
Current maturities of operating lease liabilities
Accounts payable246.3
 139.0
Accrued liabilities105.6
 78.2
Taxes payable18.6
 10.0
Liabilities held for sale
Total current liabilities387.7
 242.9
Long-term debt, net2,212.3
 2,178.6
Deferred taxes661.8
 692.1
Other long-term liabilities38.3
 32.0
Financing obligations, net
Operating lease liabilities
Deferred tax liabilities
Other long term liabilities
Liabilities held for sale
Total liabilities3,300.1
 3,145.6
Commitments and contingencies (Note 10)
 
Commitments and contingencies (Note 12)Commitments and contingencies (Note 12)
Equity:   Equity:  
Preferred stock, $0.01 par value, 13.3 shares authorized, no shares issued and outstanding—
 —
Common stock, $0.01 par value, 133.3 shares authorized, 31.1 and 31.0 shares issued and 28.3 and 28.3 shares outstanding0.3
 0.3
Common stock, $0.01 par value, 133.3 shares authorized, 33.2 and 33.1 shares issued and 28.3 and 28.2 shares outstanding
Additional paid-in capital1,758.1
 1,753.3
Accumulated deficit(679.2) (625.2)
Retained earnings
Accumulated other comprehensive loss(98.4) (118.7)
Treasury stock, at cost, 2.7 shares and 2.7 shares(692.0) (692.0)
Treasury stock, at cost, 4.9 shares and 4.9 shares
Total equity288.8
 317.7
Total liabilities and equity$3,588.9
 $3,463.3



The accompanying notes are an integral part of these financial statements.
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HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions, except per share data)
Three Months Ended March 31,
 20242023
Revenues:
Equipment rental$719 $654 
Sales of rental equipment69 71 
Sales of new equipment, parts and supplies9 8 
Service and other revenue7 7 
Total revenues804 740 
Expenses:
Direct operating307 281 
Depreciation of rental equipment160 152 
Cost of sales of rental equipment46 46 
Cost of sales of new equipment, parts and supplies6 5 
Selling, general and administrative115 106 
Non-rental depreciation and amortization29 26 
Interest expense, net61 48 
Other expense (income), net(1)1 
Total expenses723 665 
Income before income taxes81 75 
Income tax provision(16)(8)
Net income$65 $67 
Weighted average shares outstanding:
Basic28.3 29.0 
Diluted28.4 29.4 
Earnings per share:
Basic$2.30 $2.31 
Diluted$2.29 $2.28 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Revenues:       
Equipment rentals$413.1
 $360.3
 $1,084.5
 $996.0
Sales of revenue earning equipment27.7
 24.9
 128.5
 94.0
Sales of new equipment, parts and supplies13.9
 15.7
 40.3
 50.9
Service and other revenues2.9
 2.7
 9.5
 8.7
Total revenues457.6
 403.6
 1,262.8
 1,149.6
Expenses:       
Direct operating188.2
 169.9
 526.2
 487.8
Depreciation of revenue earning equipment96.3
 89.1
 283.5
 255.1
Cost of sales of revenue earning equipment28.6
 27.5
 134.9
 111.6
Cost of sales of new equipment, parts and supplies10.8
 12.1
 30.3
 39.2
Selling, general and administrative84.6
 66.8
 244.6
 203.5
Impairment—
 —
 29.3
 —
Interest expense, net32.4
 32.3
 101.8
 52.1
Other expense (income), net(1.9) (0.8) (2.3) (2.2)
Total expenses439.0
 396.9
 1,348.3
 1,147.1
Income (loss) before income taxes18.6
 6.7
 (85.5) 2.5
Income tax benefit (provision)(5.8) (3.7) 31.5
 (9.0)
Net income (loss)$12.8
 $3.0
 $(54.0) $(6.5)
Weighted average shares outstanding:       
Basic28.3
 28.3
 28.3
 28.3
Diluted28.6
 28.3
 28.3
 28.3
Income (loss) per share:       
Basic$0.45
 $0.11
 $(1.91) $(0.23)
Diluted$0.45
 $0.11
 $(1.91) $(0.23)



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


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HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)
 Three Months Ended March 31,
20242023
Net income$65 $67 
Other comprehensive income (loss):
Foreign currency translation adjustments(6)1 
Pension and postretirement benefit liability adjustments:
Amortization of net losses included in net periodic pension cost— 1 
Total other comprehensive income (loss)(6)2 
Total comprehensive income$59 $69 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income (loss)$12.8
 $3.0
 $(54.0) $(6.5)
Other comprehensive income (loss):       
Foreign currency translation adjustments12.8
 (0.6) 21.5
 23.3
Unrealized gains and losses on hedging instruments:       
Unrealized gains (losses) on hedging instruments0.5
 —
 (0.4) —
Income tax (provision) benefit related to hedging instruments(0.2) —
 0.2
 —
Pension and postretirement benefit liability adjustments:       
Amortization of net losses included in net periodic pension cost0.2
 0.5
 1.1
 1.4
Pension and postretirement benefit liability adjustments arising during the period—
 —
 (2.7) (7.8)
Income tax (provision) benefit related to defined benefit pension plans(0.1) (0.2) 0.6
 2.4
Total other comprehensive income (loss)13.2
 (0.3) 20.3
 19.3
Total comprehensive income (loss)$26.0
 $2.7
 $(33.7) $12.8





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


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HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY
Unaudited
(In millions)

Common StockAdditional
Paid-In Capital		Retained EarningsAccumulated
Other
Comprehensive
Income (Loss)		Treasury StockTotal
Equity
SharesAmount
Balance at December 31, 202328.2 $— $1,820 $498 $(118)$(927)$1,273 
Net income— — — 65 — — 65 
Other comprehensive loss— — — — (6)— (6)
Stock-based compensation charges— — 5 — — — 5 
Dividends declared, $0.665 per share— — — (19)— — (19)
Net settlement on vesting of equity awards0.1 — (12)— — — (12)
Employee stock purchase plan— — 1 — — — 1 
Exercise of stock options— — 1 — — — 1 
Balance at March 31, 202428.3 $— $1,815 $544 $(124)$(927)$1,308 

 Common Stock Additional
Paid-In Capital		 Accumulated
Deficit		 Accumulated
Other
Comprehensive
Income (Loss)		 Treasury Stock Total
Equity
Balance at:Shares Amount 
December 31, 201628.3
 $0.3
 $1,753.3
 $(625.2) $(118.7) $(692.0) $317.7
Net loss—
 —
 —
 (54.0) —
 —
 (54.0)
Other comprehensive income—
 —
 —
 —
 20.3
 —
 20.3
Stock-based compensation charges—
 —
 7.5
 —
 —
 —
 7.5
Employee stock purchase plan—
 —
 0.7
 —
 —
 —
 0.7
Exercise of stock options and other—
 —
 0.2
 —
 —
 —
 0.2
Net transfers with THC—
 —
 (3.6) —
 —
 —
 (3.6)
September 30, 201728.3
 $0.3
 $1,758.1
 $(679.2) $(98.4) $(692.0) $288.8
Common StockAdditional
Paid-In Capital		Retained EarningsAccumulated
Other
Comprehensive
Income (Loss)		Treasury StockTotal
Equity
SharesAmount
Balance at December 31, 202228.9 $— $1,820 $224 $(129)$(807)$1,108 
Net income— — — 67 — — 67 
Other comprehensive income— — — — 2 — 2 
Stock-based compensation charges— — 4 — — — 4 
Dividends declared, $0.6325 per share— — — (19)— — (19)
Net settlement on vesting of equity awards0.3 — (25)— — — (25)
Employee stock purchase plan— — 1 — — — 1 
Exercise of stock options— — 1 — — — 1 
Repurchase of common stock(0.4)— — — — (52)(52)
Balance at March 31, 202328.8 $— $1,801 $272 $(127)$(859)$1,087 













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

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HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)


 Three Months Ended March 31,
 20242023
Cash flows from operating activities:
Net income$65 $67 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of rental equipment160 152 
Depreciation of property and equipment19 17 
Amortization of intangible assets10 9 
Amortization of deferred debt and financing obligations costs1 1 
Stock-based compensation charges5 4 
Provision for receivables allowances12 13 
Deferred taxes9 3 
Gain on sale of rental equipment(23)(25)
Other3 2 
Changes in assets and liabilities:
Receivables(7)13 
Other assets(6)(2)
Accounts payable(2)8 
Accrued liabilities and other long-term liabilities(6)(27)
Net cash provided by operating activities240 235 
Cash flows from investing activities:
Rental equipment expenditures(181)(332)
Proceeds from disposal of rental equipment61 49 
Non-rental capital expenditures(30)(33)
Proceeds from disposal of property and equipment2 3 
Acquisitions, net of cash acquired(148)(138)
Net cash used in investing activities(296)(451)
 Nine Months Ended September 30,
 2017 2016
Cash flows from operating activities:   
Net loss$(54.0) $(6.5)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation of revenue earning equipment283.5
 255.1
Depreciation of property and equipment34.0
 29.1
Amortization of intangible assets3.7
 3.8
Amortization of deferred financing costs4.7
 4.2
Stock-based compensation charges7.5
 3.8
Impairment29.3
 —
Provision for receivables allowance39.4
 33.1
Deferred taxes(31.5) 9.0
Loss on sale of revenue earning equipment6.4
 17.6
Income from joint ventures(1.3) (2.1)
Other2.1
 6.5
Changes in assets and liabilities:   
Receivables(98.6) (49.1)
Inventory, prepaid and other assets(6.7) (16.7)
Accounts payable(3.4) 25.1
Accrued liabilities and other long-term liabilities22.9
 56.3
Taxes receivable and payable11.9
 1.7
Net cash provided by operating activities249.9
 370.9
Cash flows from investing activities:   
Net change in restricted cash and cash equivalents(0.1) 3.7
Revenue earning equipment expenditures(356.3) (325.7)
Proceeds from disposal of revenue earning equipment121.6
 99.0
Non-rental capital expenditures(57.1) (29.2)
Proceeds from disposal of property and equipment2.8
 4.1
Net cash used in investing activities(289.1) (248.1)



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




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HERC HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Unaudited
(In millions)

 Three Months Ended March 31,
 20242023
Cash flows from financing activities:
Proceeds from revolving lines of credit and securitization385 640 
Repayments on revolving lines of credit and securitization(302)(347)
Principal payments under finance lease and financing obligations(5)(4)
Dividends paid(20)(20)
Net settlement on vesting of equity awards(12)(25)
Proceeds from employee stock purchase plan1 1 
Proceeds from exercise of stock options1 1 
Repurchase of common stock— (44)
Net cash provided by financing activities48 202 
Effect of foreign exchange rate changes on cash and cash equivalents— — 
Net change in cash and cash equivalents during the period(8)(14)
Cash and cash equivalents at beginning of period71 54 
Cash and cash equivalents at end of period$63 $40 
Supplemental disclosure of cash flow information:
Cash paid for interest$78 $63 
Cash paid for income taxes, net$3 $1 
Supplemental disclosure of non-cash investing activity:
Purchases of rental equipment in accounts payable$— $18 
Non-rental capital expenditures in accounts payable$5 $3 
Disposal of rental equipment in accounts receivable$5 $15 
Supplemental disclosure of non-cash investing and financing activity:
Equipment acquired through finance lease$3 $3 
 Nine Months Ended September 30,
 2017 2016
Cash flows from financing activities:   
Proceeds from issuance of long-term debt—
 1,235.0
Repayments of long-term debt(123.5) —
Proceeds from revolving lines of credit405.9
 1,646.0
Repayments on revolving lines of credit(238.7) (794.0)
Principal payments under capital lease obligations(11.6) (8.7)
Proceeds from exercise of stock options and other0.2
 10.0
Net settlement on vesting of equity awards—
 (0.5)
Proceeds from employee stock purchase plan0.7
 —
Distribution and net transfers to THC—
 (2,073.5)
Net financing activities with affiliates—
 (67.4)
Payment of debt financing costs—
 (41.5)
Net cash provided by (used in) in financing activities33.0
 (94.6)
Effect of foreign exchange rate changes on cash and cash equivalents1.3
 0.4
Net increase (decrease) in cash and cash equivalents during the period(4.9) 28.6
Cash and cash equivalents at beginning of period24.0
 24.7
Cash and cash equivalents at end of period$19.1
 $53.3
    
Supplemental disclosure of cash flow information:   
Cash paid for interest$74.9
 $15.2
Cash paid (refunded) for income taxes, net$(3.1) $1.1
Supplemental disclosure of non-cash investing activity:   
Purchases of revenue earning equipment in accounts payable$106.7
 $119.1
Non-rental capital expenditures in accounts payable$1.3
 $8.8
Supplemental disclosure of non-cash financing activity:   
Non-cash settlement of transactions with THC through equity$3.6
 $97.9
Supplemental disclosure of non-cash investing and financing activity:   
Equipment acquired through capital lease$0.3
 $20.3







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




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HERC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited



Note 1—BackgroundOrganization and Description of Business


Herc Holdings Inc. ("we," "us," "our," "Herc Holdings," or "the Company" or, as the context requires, "its") is one of the leading equipment rental suppliers with approximately 275 company-operated412 locations at September 30, 2017, principally in North America.America as of March 31, 2024. The Company conducts substantially all of its operations through subsidiaries, including Herc Rentals Inc. ("Herc"). Operations are conducted underWith over 58 years of experience, the Herc Rentals brand in the United States and under the Hertz Equipment Rental brand in Canada and other international locations. The Company has been in the equipment rental business since 1965 and is a full-line equipment rental supplier in key markets, including commercialoffering a broad portfolio of equipment for rent. In addition to its principal business of equipment rental, the Company sells used equipment and residentialcontractor supplies such as construction industrialconsumables, tools, small equipment and manufacturing, civil infrastructure, automotive, governmentsafety supplies; provides repair, maintenance, equipment management services and municipalities, energy, remediation, emergency response, facilities, entertainmentsafety training to certain of its customers; offers equipment re-rental services and agriculture,provides on-site support to its customers; and provides ancillary services such as well as refineriesequipment transport, rental protection, cleaning, refueling and petrochemicals. 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 ProSolutionsTMProSolutions®, the Company'sits industry-specific solutions-based services, which includes power generation, climate control, remediation and restoration, and pumps, and its ProContractor its professional grade tools, commercial vehicles, and pump, power and climate control product offerings.tools.


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 now an independent public company and trades on the New York Stock Exchange under the symbol "HTZ." New Hertz continues to operate its global vehicle rental business through its operating subsidiaries including The Hertz Corporation ("THC"). The Company changed its name to Herc Holdings Inc. on June 30, 2016 and trades on the New York Stock Exchange under the symbol “HRI.” Following the Spin-Off, the Company continues to operate its global equipment rental business through its operating subsidiaries, including Herc.

For accounting purposes, due to the relative significance of New Hertz to Hertz Holdings, New Hertz was considered the spinnor or divesting entity in the Spin-Off and Herc Holdings was considered the spinnee or divested entity. As a result, despite the legal form of the transaction, New Hertz was the "accounting successor" to Hertz Holdings. Under the accounting rules, the historical financial information of New Hertz is required to reflect the financial information of Hertz Holdings, as if New Hertz spun off Herc Holdings in the Spin-Off. In contrast, the historical financial information of Herc Holdings, for the first half of 2016 which is included in certain information presented in these condensed consolidated financial statements, reflects the financial information of the equipment rental business and certain parent legal entities of Herc as historically operated as part of Hertz Holdings, as if Herc Holdings was a stand-alone company for such period. The historical financial information of Herc Holdings presented in these condensed consolidated financial statements is not necessarily indicative of what Herc Holdings’ financial position or results of operations actually would have been had Herc Holdings operated as a separate, independent company for all periods presented.

Note 2—Basis of Presentation and Recently IssuedSignificant Accounting PronouncementsPolicies


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, but doeshowever, these condensed consolidated financial statements do not include all of the disclosures required byfor complete annual financial statements and, accordingly, certain information, footnotes and disclosures normally included in annual financial statements, prepared in accordance with U.S. GAAP.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, 2023, filed with the SEC on February 13, 2024.


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 revenue earningrental equipment, pension and postretirement benefits, the recoverability of long-lived assets, useful lives and impairment of long-lived tangible and intangible assets including goodwill and trade name, accounting for income taxes,valuation of acquired intangible assets, pension and postretirement benefits, valuation of stock-based compensation, reserves for litigation and other contingencies allowancesand accounting for receivables and, prior to the Spin-Off, allocated general corporate expenses from THC,income taxes, among others.

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HERC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited



Since the Spin-Off occurred on June 30, 2016, the financial statements included in this Quarterly Report on Form 10-Q (this "Report") represent the carve-out financial results for the first six months of 2016 and the actual results for the three months ended September 30, 2016.


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 its 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.

Transactions between the Company and THC and its affiliates prior to the Spin-Off are herein referred to as “related party” or “affiliated” transactions. Effective with the Spin-Off on June 30, 2016, all transactions with THC and its affiliates were settled and paid in full. Effective upon the Spin-Off, the Company entered into certain agreements with New Hertz, including a transition services agreement ("TSA"). See Note 15, "Arrangements with New Hertz" for further information.

For periods prior to the Spin-Off, the condensed consolidated financial statements include net interest expense on loans receivable and payable to affiliates and expense allocations for certain corporate functions historically performed by THC, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, employee benefits and incentives, insurance and stock-based compensation. These expenses were allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on the basis of revenues, operating expenses, headcount or other relevant measures. Management believes the assumptions underlying the condensed consolidated financial statements, including the assumptions regarding the allocation of corporate expenses from THC, are reasonable. Nevertheless, the condensed consolidated financial statements may not include all of the expenses that would have been incurred had the Company been a stand-alone company during the periods presented and may not reflect the Company's condensed consolidated financial position, results of operations and cash flows had the Company been a stand-alone company during the periods presented. Actual costs that would have been incurred if the Company had been a stand-alone company would have depended on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. For additional information related to costs allocated to the Company by THC, see Note 14, "Related Party Transactions."

Reclassification of Prior Period Presentation

Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported condensed consolidated balance sheets, results of operations, equity or cash flows for any period presented.

Correction of Errors

The Company revised its condensed consolidated statement of operations for the nine months ended September 30, 2016 to correct the recording of $3.0 million of expense from direct operating expense into selling, general and administrative expense, which did not impact net income. The correction resulted from incorrect mapping of certain expense accounts to the financial statement line items.

During the first quarter of 2017, the Company identified an error related to its classification of certain restricted cash. Accordingly, the Company revised its consolidated balance sheet as of December 31, 2016 to correct the classification of $12.4 million from restricted cash to cash and cash equivalents as the cash was determined to be available for use in general operations. This correction also impacted the condensed consolidated statements of cash flows for the nine months ended September 30, 2016 by increasing cash used in investing activities by $7.6 million and increasing cash and cash equivalents at the beginning and end of the period by $9.0 million and $1.4 million, respectively. The Company will also correct its previously reported financial statements in its future filings. The Company assessed the materiality of the error from qualitative and quantitative perspectives and concluded the adjustments were not material to its previously issued annual and interim financial statements. There was no impact of this error to the condensed consolidated statements of operations, condensed consolidated statements of other comprehensive income (loss) or condensed consolidated statement of equity presented in this Report or for any period.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited






Recently Issued Accounting Pronouncements and Disclosure Rules


Not Yet Adopted

Improvements to Reportable Segment Disclosures
Simplifying the Subsequent Measurement of Inventory


In July 2015,November 2023, the Financial Accounting Standards Board ("FASB") issued guidance that requires inventory to be measured at the lower of cost and net realizable value (rather than cost or market), excluding inventory measured using the last-in, first-out method or the retail inventory method. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company adopted this guidance on January 1, 2017 in accordance with the effective date. Adoption of this guidance did not impact the Company's financial position, results of operations or cash flows.

Simplifying the Transition to the Equity Method of Accounting

In March 2016, the FASB issued guidance that eliminates the requirement to apply the equity method of accounting retrospectively when significant influence over a previously held investment is obtained. Rather, the guidance requires the investor to add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method of accounting. The Company adopted this guidance on January 1, 2017 in accordance with the effective date. Adoption of this guidance did not impact the Company's financial position, results of operations or cash flows.

Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Employee Share-Based Payment Accounting

In March 2016, the FASB issued guidance that simplifies several areas of employee share-based payment accounting, including: (i) eliminating tracking of tax "windfalls" in a separate pool within additional paid-in capital; instead, excess tax benefits and tax deficiencies are recorded within income tax expense; (ii) eliminating the requirement that excess tax benefits be realized before they can be recognized,Reportable Segment Disclosures” (“ASU 2023-07”), which is required to be recorded as an adjustment to opening retained earnings; however, the impact to the Company upon adoption was immaterial; (iii) presentation of excess tax benefits as an operating activity on the statement of cash flows, which had no impact on the Company; (iv) presentation of employee taxes paid directly to a taxing authority when directly withholding shares for tax-withholding purposes as a financing activity on the statement of cash flows, which had no impact as the Company has historically followed this presentation and (v) making a policy election regarding treatment of forfeitures, with respect to which the Company will continue to estimate forfeitures. The Company adopted this guidance on January 1, 2017 in accordance with the effective date. Adoption of this guidance did not impact the Company's consolidated statement of operations.

Improvements to Accounting for Hedging Activities

In August 2017, the FASB issued guidance that amends the hedge accounting recognition and presentation requirementsintended to improve the transparency and understandability of information conveyed to the financial statement usersreportable segment disclosure requirements, primarily through enhanced disclosures about an entity’s risk management activities.significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 20182023, and interim periods therein; however, earlywithin fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted this guidance is to be applied retrospectively to all prior periods presented in the third quarterfinancial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of 2017 using a modified retrospective approach, as required, which did not have a significantadoption. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial position, resultsstatements and related disclosures.

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 (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) 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 is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

Climate-Related Disclosure Rules

In March 2024, the SEC issued final climate-related disclosure rules that will require disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or cash flows.controlled (Scope 1) and material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. The disclosure requirements will begin phasing in for annual periods beginning in calendar year 2025. Currently, it is uncertain whether the SEC's new climate-related disclosure rules will withstand pending and future legal challenges. In April 2024, the SEC issued an order staying implementation of the new disclosure regulations pending the resolution of certain challenges. The Company is currently in the process of analyzing the impact of the rules on its related disclosures.


Not Yet Adopted

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 92.7% of total revenue for the three months ended March 31, 2024 compared to 91.9% for the same period in 2023.
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

In May 2014, ("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 FASB issued guidance that will replace most existing revenue recognition guidance in U.S. GAAP. The new guidance applies to all contracts with customers except for leases, insurance contracts, financial instruments, certain nonmonetary exchanges and certain guarantees. The core principle ofconsideration the guidance is that an entity should recognize revenue for the transfer of goods or services equal to the amount that itCompany expects to be entitled to receivein exchange for those goodssuch products or services. The new principles-based revenue recognition model requires an entity to perform five steps in its analysis: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Under the new guidance, performance obligations in a contract will be separately identified, which may impact the timing of recognition

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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 months ended March 31, 2024 and 2023 (in millions):
Three Months Ended March 31,
20242023
Topic 842Topic 606TotalTopic 842Topic 606Total
Revenues:
Equipment rental$648 $— $648 $590 $— $590 
Other rental revenue:
Delivery and pick-up— 45 45 — 41 41 
Other26 — 26 23 — 23 
Total other rental revenues26 45 71 23 41 64 
Total equipment rental674 45 719 613 41 654 
Sales of rental equipment— 69 69 — 71 71 
Sales of new equipment, parts and supplies— 9 9 — 8 8 
Service and other revenues— 7 7 — 7 7 
Total revenues$674 $130 $804 $613 $127 $740 

Topic 842 revenues
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 allocatedincludes revenue generated from renting equipment to each obligation. The measurementcustomers 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 may alsoto date. In any given accounting period, the Company will have customers return equipment and be impacted by identificationcontractually required to pay more than the cumulative amount of new performance obligationsrevenue recognized to date under the straight-line methodology. Also included in equipment rental revenue is re-rent revenue in which the Company will rent specific pieces of equipment from vendors and then re-rent that equipment to its customers. Provisions for discounts, rebates to customers and other matters, such as collectability and variable consideration. Also, additional disclosuresadjustments are required aboutprovided for in the nature, amount, timing and uncertainty ofperiod the related revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The new guidance may be adopted on either a full or modified retrospective basis. As originally issued, the guidance was effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. However in July 2015, the FASB agreed to defer the effective date until annual and interim reporting periods beginning after December 15, 2017.is recorded.

Other
In March 2016, the FASB issued clarifying guidance on assessing whether an entity is a principal or an agent in a revenue transaction, which impacts whether an entity reports revenue on a gross or net basis. In April 2016, the FASB issued guidance that reduces the complexity for identifying performance obligations and clarifies the implementation guidance on licensing for intellectual property. In May 2016, the FASB issued guidance that clarifies the collectability criterion, the presentation of sales taxes and non-cash consideration, and provides additional implementation practical expedients.

The Company believes the accounting forOther equipment rental revenue is primarily outsidecomprised 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 scope ofrental contract.
Topic 606 revenues
Delivery and pick-up
Delivery and pick-up revenue associated with renting equipment is recognized when the new revenue guidance and will be evaluated under the new lease guidance, which is described further under the heading "Leases" below. The Company's review of its revenue accounting with respect to sales of revenue earning equipment, sales of new equipment, parts and supplies and service and other revenues is ongoing; however, the Company does not believe this guidance will have a significant impact on its financial statements. The Company anticipates adopting the new revenue guidance using the modified retrospective approach, but a final determination on the selected adoption approach has not yet been made. Additionally, the Company is evaluating the disclosure requirements of the new revenue guidance, as well as its impact on the Company's internal control over financial reporting.

Leases

In February 2016, the FASB issued guidance that replaces the existing lease guidance. The new guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance also expands the requirements for lessees to record leases embedded in other arrangements and the required quantitative and qualitative disclosures surrounding leases. Accounting guidance for lessors is largely unchanged. This guidance is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods using a modified retrospective transition approach. The Company is in the process of assessing the potential impacts of adopting this guidance on its financial position, results of operations and cash flows.

Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued guidance to eliminate the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt this guidance upon its effective date of January 1, 2018 and is in the process of evaluating the potential impacts of adopting this guidance on its consolidated statements of cash flows.

Statement of Cash Flows: Restricted Cash

In November 2016, the FASB issued guidance requiring restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt this guidance upon its effective date of January 1, 2018 and does not expect the guidance to have a significant impact on its cash flows.

Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory

In October 2016, the FASB issued guidance requiring an entity to recognize upon transfer the income tax consequences of an intra-entity transfer of an asset other than inventory, eliminating the current recognition exception. Two common examples of assets included in the scope of this standardservices are intellectual property and property, plant and equipment. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company plans to adopt this guidance upon itsperformed.
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HERC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited






Sales of Rental Equipment, New Equipment, Parts and Supplies
effective date of January 1, 2018 and is in the process of evaluating the potential impacts of adopting this guidance on its financial position, results of operations and cash flows.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued guidance to simplify the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The guidance requires that an entity recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds the reporting unit’s fair value. This guidance is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company plans to adopt thesells its used rental equipment, new guidance in the fourth quarter of 2017 when it performs its annual goodwill impairment testequipment, parts and supplies. Revenues recorded for each category are as of October 1, 2017. Adoption of the guidance will not impact the Company's financial position, results of operations or cash flows.

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs

In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit costs in the income statement and on the components eligible for capitalization. The guidance requires the reporting of the service cost component of the net periodic benefit costs in the same income statement line item as other components of net periodic costs arising from services rendered by an employee during the period, and that non-service-cost components be presented in the income statement separately from the service cost components and outside a subtotal of income from operations. The guidance also allows for the capitalization of the service cost components, when applicable. This guidance is effective for annual and interim periods beginning after December 15, 2017. The Company plans to adopt this guidance upon its effective date of January 1, 2018. Adoption of this guidance will not have a significant impact on the Company's results of operations.

Compensation - Stock Compensation

In May 2017, the FASB issued guidance pursuant to which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the updated guidance, a modification is defined as a change in the terms or conditions of a share-based payment award, and an entity should account for the effects of a modification unless all of the following are met:

1.The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation techniques that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.
2.The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified.
3.The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.

This guidance requires prospective adoption and is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt this guidance upon its effective date of January 1, 2018 and does not expect the guidance to have a significant impact on its financial position, results of operations or cash flows.

Note 3—Revenue Earning Equipment
Revenue earning equipment consists of the followingfollows (in millions):
Three Months Ended March 31,
20242023
Sales of rental equipment$69 $71 
Sales of new equipment3 1 
Sales of parts and supplies6 7 
Total$78 $79 
 September 30, 2017 December 31, 2016
Revenue earning equipment$3,858.1
 $3,695.5
Less: Accumulated depreciation(1,392.6) (1,305.5)
Revenue earning equipment, net$2,465.5
 $2,390.0


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.
DuringThe Company routinely sells its used rental equipment in order to manage repair and maintenance costs, as well as the second quartercomposition, age and size of 2017,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 deemed certainsells 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 doubtful accounts, for the sale of rental equipment, new equipment, parts and supplies, was approximately $16 million and $11 million as of March 31, 2024 and December 31, 2023, respectively.
Service and other revenues
Service and other revenues primarily include revenue earningearned 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 net book value of approximately $3.8 million,customer’s rental amounts and, therefore, it is not practical for the Company to be held for sale and reclassified such equipmentseparate the accounts receivable amount related to "Prepaidservices and other current assets"revenues that are accounted for under Topic 606; however, such amount is not considered material.
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 doubtful accounts 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 months ended March 31, 2024 and 2023 that was included in the condensed consolidatedcontract liability balance as of the beginning of each period.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited






Performance obligations
balance sheet. The
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 also performed an impairment assessmentdoes not generally recognize a significant amount of revenue earning equipmentfrom performance obligations satisfied (or partially satisfied) in previous periods, and recorded a chargethe amount of $3.1 millionsuch revenue recognized during the ninethree months ended September 30, 2017.March 31, 2024 and 2023 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 March 31, 2024.


Contract estimates and judgments
Note 4—Intangible Asset Impairment

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

•The transaction price is generally fixed and stated on the Company's contracts;
•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;
•The Company's revenues do not include material amounts of variable consideration; and
•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 had been in the process of developingmonitors and reviews its estimated standalone selling prices on a new financial system and point of sale system as part of the separation from New Hertz that was initiated prior to the Spin-Off.  During June 2017, the Company made the decision to discontinue developing these new systems based on the inability to provide the anticipated substantive service potential and significantly higher costs than were originally expected to develop the systems. As a result, the Company recorded an impairment charge of $26.2 million during the nine months ended September 30, 2017.regular basis.


Note 5—Debt4—Rental Equipment


The Company's debtRental equipment consists of the following (in millions):
March 31, 2024December 31, 2023
Rental equipment$5,851 $5,785 
Less: Accumulated depreciation(2,020)(1,954)
Rental equipment, net$3,831 $3,831 

Note 5—Goodwill and Intangible Assets
  Weighted Average Effective Interest Rate at September 30, 2017 Weighted Average Stated Interest Rate at September 30, 2017 Fixed or Floating Interest Rate Maturity September 30,
2017		 December 31,
2016
Senior Secured Second Priority Notes            
2022 Notes 7.88% 7.50% Fixed 2022 $549.0
 $610.0
2024 Notes 8.06% 7.75% Fixed 2024 562.5
 625.0
Other Debt            
ABL Credit Facility N/A 2.96% Floating 2021 1,075.0
 910.0
Capital leases 4.01% N/A Fixed 2017-2021 57.9
 70.3
Other borrowings N/A 4.79% Floating 2018 2.1
 —
Unamortized Debt Issuance Costs(a)
         (17.0) (21.0)
Total debt         2,229.5
 2,194.3
Less: Current maturities of long-term debt         (17.2) (15.7)
Long-term debt, net         $2,212.3
 $2,178.6


(a)Unamortized debt issuance costs totaling $14.2 million and $17.1 million related to the ABL Credit Facility (as defined below) are included in "Other long-term assets" in the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016, respectively.

Goodwill
The effective interest rates for the fixed rate 2022 Notes and 2024 Notes (as defined below) include the stated interest on the notes and the amortization of any debt issuance costs.

Senior Secured Second Priority Notes

In June 2016, Herc issued $610.0 million aggregate principal amount of 7.50% senior secured second priority notes due 2022 (the "2022 Notes") and $625.0 million aggregate principal amount of 7.75% senior secured second priority notes due 2024 (the "2024 Notes" and, together with the 2022 Notes, the "Notes"). Interest on the 2022 Notes accrues at the rate of 7.50% per annum and is payable semi-annually in arrears on June 1 and December 1. The 2022 Notes mature on June 1, 2022. Interest on the 2024 Notes accrues at the rate of 7.75% per annum and is payable semi-annually in arrears on June 1 and December 1. The 2024 Notes mature on June 1, 2024.

In March 2017, Herc drew down on its ABL Credit Facility (as defined below) and redeemed $61.0 million in aggregate principal amount of the 2022 Notes and $62.5 million in aggregate principal amount of the 2024 Notes and recorded a $5.8 million loss on the early extinguishment of debt, comprised of a 3% cash premium totaling $3.7 million and a non-cash charge of $2.1 million for the write-off of unamortized debt issuance costs. The loss on early extinguishment of debt is included in "Interest expense, net” infollowing summarizes the Company's condensed consolidated statement of operations.goodwill (in millions):

March 31, 2024December 31, 2023
Balance at the beginning of the period:
Goodwill$1,154 $1,088 
Accumulated impairment losses(671)(669)
483 419 
   Goodwill classified as held for sale— (65)
Additions55 128 
Currency translation(1)1 
Balance at the end of the period:
Goodwill1,206 1,154 
Accumulated impairment losses(669)(671)
$537 $483 
See Note 16, "Subsequent Events" regarding an additional partial redemption of the Notes.
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Unaudited






Intangible Assets


Intangible assets, net, consisted of the following major classes (in millions):
 March 31, 2024
 Gross Carrying AmountAccumulated AmortizationNet Carrying Value
Finite-lived intangible assets: 
Customer-related and non-compete agreements$284 $(77)$207 
Internally developed software(a)
68 (49)19 
Total352 (126)226 
Indefinite-lived intangible assets: 
Trade name270 — 270 
Total intangible assets, net$622 $(126)$496 
(a) Includes capitalized costs of $7 million yet to be placed into service.
 December 31, 2023
 Gross Carrying
Amount		Accumulated
Amortization		Net Carrying Value
Finite-lived intangible assets:  
Customer-related and non-compete agreements$248 $(69)$179 
Internally developed software(a)
64 (47)17 
Total312 (116)196 
Indefinite-lived intangible assets: 
Trade name271 — 271 
Total intangible assets, net$583 $(116)$467 
(a) Includes capitalized costs of $3 million yet to be placed into service.

Amortization of intangible assets was $10 million and $9 million for the three months ended March 31, 2024 and 2023, respectively.















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Note 6—Assets Held for Sale

As of March 31, 2024, the Company's assets held for sale consisted 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. Cinelease has been actively marketed for sale and management expects a transaction to be completed within 12 months of the date it was determined to be held for sale.

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

March 31, 2024December 31, 2023
Assets held for sale:
Cash and cash equivalents$1 $1 
Receivables, net of allowances14 8 
Other current assets12 12 
    Total current assets held for sale$27 $21 
Rental equipment, net$184 $183 
Property and equipment, net35 34 
Right-of-use lease assets74 75 
Intangible assets, net4 4 
Goodwill65 65 
Other long-term assets47 47 
    Total long-term assets held for sale$409 $408 
Liabilities held for sale:
Current maturities of operating lease liabilities$8 $8 
Accounts payable6 6 
Accrued liabilities9 5 
    Total current liabilities held for sale$23 $19 
Operating lease liabilities$66 $68 
    Total long-term liabilities held for sale$66 $68 


Note 7—Leases

The Company leases real estate, office equipment and service vehicles. The Company's leases have remaining lease terms of up to 20 years, some of which include options to extend the leases for up to 20 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.

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The components of lease expense consist of the following (in millions):
Three Months Ended March 31,
Classification20242023
Operating lease cost(a)
Direct operating$36 $33 
Finance lease cost:
Amortization of ROU assetsDepreciation and amortization6 6 
Interest on lease liabilitiesInterest expense, net1 — 
Sublease incomeEquipment rental revenue(18)(16)
Net lease cost$25 $23 

(a) Includes short-term leases of $14 million for the three months ended March 31, 2024 and 2023, and variable lease costs of $1 million for the three months ended March 31, 2024 and 2023.


Note 8—Debt

The Company's debt consists of the following (in millions):
Weighted Average Effective Interest Rate at March 31, 2024Weighted Average Stated Interest Rate at March 31, 2024Fixed or Floating Interest RateMaturityMarch 31,
2024		December 31,
2023
Senior Notes
2027 Notes5.61%5.50%Fixed2027$1,200 $1,200 
Other Debt
ABL Credit FacilityN/A6.92%Floating20272,173 2,072 
AR FacilityN/A6.15%Floating2024325 345 
Finance lease liabilities4.07%N/AFixed2024-203175 76 
Unamortized Debt Issuance Costs(a)
(5)(5)
Total debt3,768 3,688 
Less: Current maturities of long-term debt(15)(15)
Long-term debt, net$3,753 $3,673 

(a)    Unamortized debt issuance costs totaling $8 million related to the ABL Credit Facility and AR Facility (as each is defined below) as of March 31, 2024 and December 31, 2023, are included in "Other long-term assets" in the condensed consolidated balance sheets.

The effective interest rate for the fixed rate 2027 Notes (as defined below) includes the stated interest on the notes and the amortization of any debt issuance costs.

Senior 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, 2023.

ABL Credit Facility

The Company'sOn July 31, 2019, Herc Holdings, Herc and certain other subsidiaries of Herc Holdings entered into a credit agreement with respect to a senior secured asset-based revolving credit agreement, executed by its Herc subsidiary,facility (the "ABL Credit Facility"), which was amended and extended on July 5, 2022. The ABL Credit Facility provides for senior secured revolving loansaggregate maximum borrowings of up to a maximum aggregate principal amount$3.5 billion (subject to
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availability under a borrowing base), including revolving loans in an aggregate principal amount of $350 million available to Canadian borrowers and U.S. borrowers (the "ABL Credit Facility"). 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. Extensions of credit under the ABL Credit Facility are limited by a borrowing base calculated periodically based on specified percentages of the value of eligible rental equipment, eligible service vehicles, eligible spare parts and merchandise, eligible accounts receivable, and eligible unbilled accounts subject to certain reserves and other adjustments. Subject to the satisfaction of certain conditions and limitations, the ABL Credit Facility allows for the addition of incremental revolving commitments and/or incremental term loan commitments. In addition, the ABL Credit Facility permits Herc to increase the amount of commitments under the ABL Credit Facility with the consent of each lender providing an additional commitment, subject to satisfaction of certain conditions.loans. The ABL Credit Facility matures on June 30, 2021.

The interest rates applicable to the loans under the ABL Credit Facility are based on a fluctuating rate of interest measured by reference to either, at the borrowers’ option, (i) an adjusted London inter-bank offered rate, plus a borrowing margin or (ii) an alternate base rate, plus a borrowing margin (or, in the case of the Canadian borrowers, a rate equal to the rate on bankers’ acceptances with the same maturity, plus a borrowing margin). The borrowing margin onJuly 5, 2027. Additional information about the ABL Credit Facility is determined basedincluded 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, 2023.

Accounts Receivable Securitization Facility
The accounts receivable securitization facility (the "AR Facility") was amended in August 2023 to extend the maturity date to August 31, 2024 and increase the aggregate commitments from $335 million to $370 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 pricing grid that is bifurcated based on corporate credit ratings, with levels withinlong-term basis either by further extending the grid based on available commitments. Customary fees are also payable in respectmaturity date of the ABL CreditAR Facility including a commitment fee onor by utilizing the unutilized portion thereof.

Other Borrowings

In June 2017,capacity available at the Company's subsidiary in China entered into uncommitted credit agreements with a bank for up to the aggregate principal amount of $10.0 million. Interest accrues on the loans drawn under these facilities at a rate of 110% of the prevailing base lending rates published by People's Bank of China and is payable quarterly. As of September 30, 2017, the Company had short-term borrowings under these facilities totaling $2.1 million.

Covenants

Notes

The indenture governing the Notes contains covenants that, among other things, limit the ability of Herc to incur additional indebtedness, guarantee indebtedness or issue certain preferred shares; pay dividends on, redeem or repurchase stock or make other distributions in respect of its capital stock; repurchase, prepay or redeem subordinated indebtedness; make loans and investments; create liens; transfer or sell assets; consolidate, merge or sell or otherwise dispose of all or substantially all of its assets; enter into certain transactions with affiliates; and designate subsidiaries as unrestricted subsidiaries. 

ABL Credit Facility

The ABL Credit Facility contains a number of negative covenants that, among other things, limit or restrict the ability of the borrowers and, in certain cases, their restricted subsidiaries to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make certain dividends, create liens, make investments, make acquisitions, engage in mergers, change the nature of their business, engage in certain transactions with affiliates and enter into certain restrictive agreements.

Failure to maintain certain levels of liquidity will subject the Herc credit group to a contractually specified fixed charge coverage ratio of not less than 1:1 for the four quarters most recently ended. As of September 30, 2017, the Company was not subject to the fixed charge coverage ratio test.

Covenants in the ABL Credit Facility restrict payment of cash dividends to any parent of Herc, including Herc Holdings, except in an aggregate amount, taken together with certain investments, acquisitions and optional prepayments, not to exceed $200 million. Herc may also pay additional cash dividendsbalance sheet date under the ABL Credit Facility under certain circumstances.Facility.

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The ABL Credit Facility also contains certain affirmative covenants, including financial and other reporting requirements.

Borrowing Capacity and Availability

After outstanding borrowings, the following was available to the Company under the ABL Credit Facility and AR Facility as of September 30, 2017March 31, 2024 (in millions):
Remaining
Capacity		Availability Under
Borrowing Base
Limitation
ABL Credit Facility$1,300 $1,300 
AR Facility45 5 
Total$1,345 $1,305 
 
Remaining
Capacity
 
Availability Under
Borrowing Base
Limitation
ABL Credit Facility$652.5
 $652.5

In addition, as of September 30, 2017, the Company's subsidiary in China had uncommitted credit facilities of which $7.9 million was unutilized.


Letters of Credit

As of September 30, 2017, the ABL Credit Facility had $227.5 million available under the letter of credit facility sublimit, subject to borrowing base restrictions, as $22.5March 31, 2024, $27 million of standby letters of credit were issued and outstanding, none of which have been drawn upon. The ABL Credit Facility had $223 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.
Note 6—Employee Retirement Benefits9—Financing Obligations


In July 2016,prior years, Herc entered into sale-leaseback transactions pursuant to which it sold 44 properties located in the Company established the Herc Holdings Retirement Plan (the "Plan"). Prior to the Spin-Off, the Company participated inU.S. and certain service vehicles. The Hertz Corporation Account Balance Defined Benefit Pension Plan (the "Hertz Plan"). The majority of assets and liabilities attributable to current and former employeessale of the equipment rental business were transferred fromproperties and service vehicles did not qualify for sale-leaseback accounting; therefore, the Hertz Plan tobook value of the Planassets remain on the Company's consolidated balance sheet. The Company's financing obligations consist of the following the Spin-Off based on a preliminary allocation. The final allocations and transfers were completed in April and August 2017 and were $3.6 million lower than the preliminary allocation, resulting in an increase to the pension liability funded status and a corresponding offset to additional paid-in capital.

The following table sets forth the net periodic pension cost (benefit) (in millions):
Weighted Average Effective Interest Rate at March 31, 2024MaturitiesMarch 31, 2024December 31, 2023
Financing obligations5.38%2026-2038$109 $110 
Unamortized financing issuance costs(2)(2)
Total financing obligations107 108 
Less: Current maturities of financing obligations(4)(4)
Financing obligations, net$103 $104 
16
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Components of Net Periodic Pension Cost (Benefit):       
Interest cost$1.6
 $1.3
 $4.6
 $4.4
Expected return on plan assets(1.6) (1.9) (4.7) (5.9)
Net amortizations of actuarial net loss0.2
 0.5
 1.1
 1.4
Net periodic pension cost (benefit)$0.2
 $(0.1) $1.0
 $(0.1)


Note 7—Stock-Based Compensation

During the three months ended September 30, 2017, under the Herc Holdings Inc. 2008 Omnibus Incentive Plan (the "Omnibus Plan"), the Company granted 20,385 restricted stock units ("RSUs") and 4,587 performance stock units ("PSUs") at a weighted average grant date fair value of $43.72 per unit.

A summary of the total compensation expense and associated income tax benefits recognized under the Omnibus Plan are as follows (in millions):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Compensation expense$3.0
 $1.1
 $7.5
 $3.8
Income tax benefit(1.1) (0.4) (2.9) (1.5)
Total$1.9
 $0.7
 $4.6
 $2.3
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Stock-based compensation expense includes expense attributable to the Company based on the terms of the awards granted under the Omnibus Plan to the participants in the Omnibus Plan. Additionally, during the nine months ended September 30, 2016, stock-based compensation expense includes an allocation of THC's corporate and shared functional employee expenses of $2.0 million on a pre-tax basis.

As of September 30, 2017, there was $20.1 million of total unrecognized compensation cost related to non-vested stock options, RSUs and PSUs granted under the Omnibus Plan. The total unrecognized compensation cost is expected to be recognized over the remaining 2.0 years, on a weighted average basis, of the requisite service period that began on the grant dates.

Employee Stock Purchase Plan

In connection with the Spin-Off, Herc Holdings inherited the Hertz Global Holdings, Inc. Employee Stock Purchase Plan (the "ESPP"). At the date of the Spin-Off, the ESPP had been suspended; however, the Company reinstated the ESPP on January 1, 2017, which was amended and restated as the Herc Holdings Inc. Employee Stock Purchase Plan.

The ESPP enables eligible employees to purchase the Company's common stock at a price per share equal to 85% of the fair market value of a share at the acquisition date. Payment for shares is made through payroll deductions based on a predetermined contribution amount established by the individual employee. During the three and nine months ended September 30, 2017, the Company recognized compensation expense of $0.1 million and $0.3 million, respectively, related to the ESPP.

Note 8—10—Income Taxes


Income tax provision was $16 million, with an effective tax rate of $5.820%,for the three months ended March 31, 2024 compared to $8 million and 11% in the same period of 2023. The rate increase was driven by the reduced benefit related to stock-based compensation of $3 million for the third quarter of 2017 was primarily driven by pre-tax income and non-deductible expenses and valuation allowances recorded on losses generated by foreign loss jurisdictions. Income tax benefit of $31.5three months ended March 31, 2024 compared to $12 million for the nine months ended September 30, 2017 was primarily driven by pre-tax losses, partially offset bysame period of 2023, and certain non-deductible expenses and valuation allowances recorded on losses generated by foreign loss jurisdictions.expenses.


Income tax provision of $3.7 million in the third quarter of 2016 was primarily driven by certain nondeductible charges within the quarter. Income tax provision of $9.0 million for the nine months ended September 30, 2016 was primarily due to $6.4 million of tax expense related to state taxes incurred as a result of the Spin-Off. The effective tax rate for the 2017 fiscal year is expected to be approximately 37%.

In connection with the Spin-Off, net operating loss carryforwards were split between the Company and New Hertz pursuant to the Internal Revenue Code and regulations. While not expected to be significant, the split of net operating loss carryforwards may be further adjusted as income tax returns are finalized through 2017.

Note 9—11—Accumulated Other Comprehensive Income (Loss)


The changes in the accumulated other comprehensive income (loss) balance by component (net of tax) for the ninethree months ended September 30, 2017March 31, 2024 are presented in the table below (in millions).
Pension and Other Post-Employment BenefitsForeign Currency ItemsAccumulated Other Comprehensive Income (Loss)
Balance at December 31, 2023$(20)$(98)$(118)
Other comprehensive loss before reclassification— (6)(6)
Net current period other comprehensive loss— (6)(6)
Balance at March 31, 2024$(20)$(104)$(124)
 Pension and Other Post-Employment Benefits Unrealized Losses on Hedging Instruments Foreign Currency Items Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2016$(14.6) $—
 $(104.1) $(118.7)
Other comprehensive income (loss) before reclassification(1.7) (0.2) 21.5
 19.6
Amounts reclassified from accumulated other comprehensive loss0.7
 —
 —
 0.7
Net current period other comprehensive income (loss)(1.0) (0.2) 21.5
 20.3
Balance at September 30, 2017$(15.6) $(0.2) $(82.6) $(98.4)

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Amounts reclassified from accumulated other comprehensive income (loss) to net income (loss) were as follows (in millions):
    Three Months Ended September 30, Nine Months Ended September 30,
Pension and other postretirement benefit plans Statement of Operations Caption 2017 2016 2017 2016
Amortization of actuarial losses Selling, general and administrative $0.2
 $0.5
 $1.1
 $1.4
Tax benefit Income tax benefit —
 (0.2) (0.4) (0.5)
Total reclassifications for the period   $0.2
 $0.3
 $0.7
 $0.9

Note 10—12—Commitments and Contingencies


Legal Proceedings


From time to time the Company is a party to various legal proceedings. Summarized below are the most significant legal proceedings to which the Company is a party.

In re Hertz Global Holdings, Inc. Securities Litigation - In November 2013, a putative shareholder class action, Pedro Ramirez, Jr. v. Hertz Global Holdings, Inc., et al., was commenced in the U.S. District Court for the District of New Jersey naming Hertz Holdings and certain of its officers as defendants and alleging violations of the federal securities laws. The complaint alleged that Hertz Holdings made material misrepresentations and/or omission of material fact in its public disclosures during the period from February 25, 2013 through November 4, 2013, in violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 10b-5 promulgated thereunder. The complaint sought unspecified monetary damages on behalf of the purported class and an award of costs and expenses, including counsel fees and expert fees. In June 2014, Hertz Holdings moved to dismiss the amended complaint. In October 2014, the court granted Hertz Holdings’ motion to dismiss without prejudice, allowing the plaintiff to amend the complaint a second time. In November 2014, plaintiff filed a second amended complaint which shortened the putative class period and made allegations that were not substantively very different than the allegations in the prior complaint. In early 2015, Hertz Holdings moved to dismiss the second amended complaint. In July 2015, the court granted Hertz Holdings’ motion to dismiss without prejudice, allowing plaintiff to file a third amended complaint. In August 2015, plaintiff filed a third amended complaint which included additional allegations, named additional then-current and former officers as defendants and expanded the putative class period to extend from February 14, 2013 to July 16, 2015. In November 2015, Hertz Holdings moved to dismiss the third amended complaint. The plaintiff then sought leave to add a new plaintiff because of challenges to the standing of the first plaintiff. The court granted plaintiff leave to file a fourth amended complaint to add the new plaintiff, and the new complaint was filed on March 1, 2016. Hertz Holdings and the individual defendants moved to dismiss the fourth amended complaint with prejudice on March 24, 2016. In April 2017, the court granted Hertz Holdings' and the individual defendants' motions to dismiss and dismissed the action with prejudice. In May 2017, plaintiff filed a notice of appeal and, in October 2017, the U.S. Court of Appeals for the Third Circuit issued a briefing schedule. The plaintiff/appellant's initial brief is due in November 2017 and briefing is scheduled to conclude in January 2018.

Governmental Investigations - In June 2014, Hertz Holdings was advised by the staff of the New York Regional Office of the Securities and Exchange Commission ("SEC") that it is investigating the events disclosed in certain of Hertz Holdings’ filings with the SEC. In addition, in December 2014 a state securities regulator requested information from Hertz Holdings regarding the same or similar events. In May 2017, the state securities regulator advised New Hertz that it had closed its investigation. Starting in June 2016, Hertz Holdings and New Hertz have had communications with the United States Attorney’s Office for the District of New Jersey regarding the same or similar events. New Hertz is responsible for managing these matters. The investigations and communications generally involve the restatements included in Hertz Holdings’ 2014 Form 10-K and related accounting for prior periods. Among other matters, the restatements included in Hertz Holdings’ 2014 Form 10-K addressed a variety of accounting matters involving THC's former Brazil vehicle rental operations. Hertz Holdings identified certain activities by THC's former vehicle rental operations in Brazil that may raise issues under the Foreign Corrupt Practices Act and other federal and local laws. THC has self-reported these issues to appropriate government entities, and these issues continue to be investigated. The Company has and intends to continue to cooperate with all governmental requests related to the foregoing. At this time, the Company is currently unable to
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predict the outcome of these proceedings and issues or to reasonably estimate the range of possible losses, which could be material.

In addition, 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, including certain of those described above, 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 including those discussed above, 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.


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.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 partythird-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:

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The Spin-Off


In connection with the Spin-Off, pursuant to the separation and distribution agreement (as(agreements and defined terms are discussed in Note 15, "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.


Environmental

The Company has indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which the Company may be held responsible could be substantial. The probable expenses that the Company expects to incur for such matters have been accrued, and those expenses are reflected in the Company's consolidated financial statements. As of September 30, 2017 and December 31, 2016, the aggregate amounts accrued for environmental liabilities, including liability for environmental indemnities, reflected in the Company's consolidated balance sheets in "Accrued liabilities" were $0.1 million and $0.2 million, respectively. The accrual generally represents the estimated cost to study potential environmental issues at sites deemed to require investigation or clean-up activities, and the estimated cost to implement remediation actions, including on-
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going maintenance, as required. Cost estimates are developed by site. Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the sites. For many sites, the remediation costs and other damages for which the Company ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as the Company's connection to the site, the materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation).

Note 11—Financial Instruments

The Company established risk management policies and procedures, which seek to reduce the Company’s risk exposure to fluctuations in foreign currency exchange rates and interest rates. However, there can be no assurance that these policies and procedures will be successful. Although the instruments utilized involve varying degrees of credit, market and interest risk, the counterparties to the agreements are expected to perform fully under the terms of the agreements. The Company monitors counterparty credit risk, including lenders, on a regular basis, but cannot be certain that all risks will be discerned or that its risk management policies and procedures will always be effective. Additionally, in the event of default under the Company’s master derivative agreements, the non-defaulting party has the option to set-off any amounts owed with regard to open derivative positions.

Foreign Currency Exchange Rate Risk

The Company’s objective in managing exposure to foreign currency fluctuations is to limit the exposure of certain cash flows and earnings to foreign currency exchange rate changes through the use of various derivative contracts. The Company experiences foreign currency risks in its global operations as a result of various factors, including intercompany local currency denominated loans, rental operations in various currencies and purchasing fleet in various currencies.

Interest Rate Swap Arrangement

The Company entered into a three-year LIBOR-based interest rate swap arrangement on a portion of its outstanding ABL Credit Facility. The aggregate amount of the swap is equal to a portion of the U.S. dollar principal amount of the ABL Credit Facility and the payment dates of the swap coincide with the interest payment dates of the ABL Credit Facility. The swap contract provides for the Company to pay a fixed interest rate and receive a floating rate. The variable interest rate resets monthly. The swap has been accounted for as cash flow hedge of a portion of the ABL Credit Facility.

The following table summarizes the outstanding interest rate swap arrangement as of September 30, 2017 (dollars in millions):
 Aggregate Notional Amount Receive Rate Receive Rate as of September 30, 2017 Pay Rate
ABL Credit Facility$350.0
 1 month LIBOR + 1.75% 3.0% 3.5%

The following table summarizes the estimated fair value of the Company's financial instruments (in millions):
 Fair Value of Financial Instruments
 Prepaid & Other Current Assets Accrued Liabilities
 September 30,
2017		 December 31,
2016		 September 30,
2017		 December 31,
2016
Derivatives Designated as Hedging Instruments       
Interest rate swap$—
 $—
 $0.4
 $—
Derivatives Not Designated as Hedging Instruments

 

 

 

Foreign currency forward contracts$—
 $0.1
 $—
 $—
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The following table summarizes the gains and losses on derivative instruments for the periods indicated. Gains and losses recognized on foreign currency forward contracts and the effective portion of interest rate swaps are included in the condensed consolidated statements of operations together with the corresponding offsetting gains and losses on the underlying hedged transactions. All gains and losses recognized are included in "Selling, general and administrative" in the condensed consolidated statements of operations (in millions).
 Loss Recognized
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Derivatives Not Designated as Hedging Instruments       
Foreign currency forward contracts$(0.4) $(2.6) $(4.0) $(2.7)

Note 12—13—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.


Cash Equivalents


Cash equivalents when held, 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 determinesmeasures the fair value of cash equivalents using a market approach based on quoted prices in active markets. The Company had no$31 million in cash equivalents at September 30, 2017 orMarch 31, 2024 and December 31, 2016.2023.


Financial InstrumentsDebt Obligations


The fair values of the Company's ABL Credit Facility, AR Facility and finance lease liabilities approximated their book values as of March 31, 2024 and December 31, 2023. The fair value of the Company's financial instruments as of September 30, 2017 and December 31, 2016 are shown in Note 11, "Financial Instruments." The Company's financial instruments are classified as Level 2 assets and liabilities and are priced using quoted market prices for similar assets or liabilities in active markets.

Debt Obligations

The fair value of debt2027 Notes is 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).
March 31, 2024December 31, 2023
Nominal Unpaid Principal BalanceAggregate Fair ValueNominal Unpaid Principal BalanceAggregate Fair Value
2027 Notes$1,200 $1,177 $1,200 $1,180 
18
 September 30, 2017 December 31, 2016
 Nominal Unpaid Principal Balance Aggregate Fair Value Nominal Unpaid Principal Balance Aggregate Fair Value
Debt$2,246.5
 $2,334.1
 $2,215.3
 $2,275.5


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HERC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited



Note 13—14—Earnings (Loss) Per Share


Basic earnings (loss) per share has been computed based upon the weighted average number of common shares outstanding. Diluted earnings (loss) 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.

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HERC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited




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

Three Months Ended March 31,
20242023
Basic and diluted earnings per share:
Numerator:
Net income, basic and diluted$65 $67 
Denominator: 
Basic weighted average common shares28.3 29.0 
Stock options, RSUs and PSUs0.1 0.4 
Weighted average shares used to calculate diluted earnings per share28.4 29.4 
Earnings per share:
Basic$2.30 $2.31 
Diluted$2.29 $2.28 
Antidilutive stock options, RSUs and PSUs— 0.1 

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Basic and diluted income (loss) per share:       
Numerator:       
Net income (loss), basic and diluted$12.8
 $3.0
 $(54.0) $(6.5)
Denominator:       
Basic weighted average common shares28.3
 28.3
 28.3
 28.3
Stock options, RSUs and PSUs0.3
 —
 —
 —
Weighted average shares used to calculate diluted loss per share28.6
 28.3
 28.3
 28.3
Income (loss) per share:       
Basic$0.45
 $0.11
 $(1.91) $(0.23)
Diluted$0.45
 $0.11
 $(1.91) $(0.23)
Antidilutive stock options, RSUs and PSUs0.4
 0.3
 0.7
 0.2

Note 14—Related Party Transactions

Transactions between the Company and THC and its affiliates prior to the Spin-Off are herein referred to as "related party" or "affiliated" transactions. Effective with the Spin-Off on June 30, 2016, all transactions with THC and its affiliates were settled and paid in full. Effective upon the Spin-Off, the Company entered into, among other things, a transition services agreement with New Hertz. See Note 15, "Arrangements with New Hertz" for further information.

Loans with Affiliates

Prior to the Spin-Off, the Company entered into various loan agreements with affiliates as part of a centralized approach to the financing of worldwide operations by THC. The amounts due to and from other affiliates had various interest rates and maturity dates but were generally short-term in nature. Effective with the Spin-Off on June 30, 2016, any loans with affiliates were settled and paid in full, including any accrued interest.

Intercompany Transactions

Prior to the Spin-Off, all significant intercompany payable and receivable balances between the Company and THC were considered to be effectively settled for cash in the consolidated financial statements at the time the transaction was recorded.

Corporate Allocations

Prior to the Spin-Off, THC provided services to and funded certain expenses for the Company that were recorded at the THC level. As discussed in Note 2, "Basis of Presentation and Recently Issued Accounting Pronouncements," the financial information in these condensed consolidated financial statements includes, in periods prior to June 30, 2016, direct costs of the Company incurred by THC on the Company’s behalf and an allocation of general corporate expenses of THC which were not historically allocated to the Company for certain support functions that were provided on a centralized basis within THC and not recorded at the business unit level, such as expenses related to finance, human resources, information technology, facilities and legal, among others, and that would have been incurred had the Company been a separate, stand-alone entity.

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HERC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited



Costs incurred and allocated by THC that were included in the condensed consolidated statements of operations are shown in the following table (in millions). No costs were allocated by THC after the Spin-Off occurred on June 30, 2016.
  Nine Months Ended September 30,
  2016
Direct operating $0.6
Selling, general and administrative 18.0
Total allocated expenses $18.6

Agreements with Carl C. Icahn

The Company is subject to the Nomination and Standstill Agreement, dated September 15, 2014 (the "Nomination and Standstill Agreement"), with Carl C. Icahn, High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Enterprises G.P. Inc., Icahn Enterprises Holdings L.P., IPH GP LLC, Icahn Capital LP, Icahn Onshore LP, Icahn Offshore LP, Beckton Corp., Vincent J. Intrieri, Samuel Merksamer and Daniel A. Ninivaggi (collectively, the "Original Icahn Group"). In connection with their appointments to the Company’s board of directors, each of Courtney Mather, Louis J. Pastor and Stephen A. Mongillo (collectively, the "Icahn Designees," and, together with the Original Icahn Group, the "Icahn Group") executed a Joinder Agreement agreeing to become bound as a party to the terms and conditions of the Nomination and Standstill Agreement (such Joinder Agreements, together with the Nomination and Standstill Agreement, are collectively referred to herein as the "Icahn Agreements").

Pursuant to the Icahn Agreements, the Icahn Designees were appointed to the Company’s board of directors effective June 30, 2016. Pursuant to the Icahn Agreements, so long as an Icahn Designee is a member of the board of directors, the board of directors will not be expanded beyond its current size of 11 members without approval from the Icahn Designees then on the board of directors. In addition, pursuant to the Icahn Agreements, subject to certain restrictions and requirements, the Icahn Group will have certain replacement rights in the event an Icahn Designee resigns or is otherwise unable to serve as a director (other than as a result of not being nominated by the Company for an annual meeting).

In addition, until the date that no Icahn Designee is a member of the Board (or otherwise deemed to be on the Board pursuant to the terms of the Icahn Agreements) (the “Board Representation Period”), the Icahn Group agrees to vote all of its shares of the Company’s common stock in favor of the election of all of the Company’s director nominees at each annual or special meeting of the Company’s stockholders, and, subject to limited exceptions, the Icahn Group further agrees to (i) adhere to certain standstill obligations, including the obligation to not solicit proxies or consents or influence others with respect to the same, and (ii) not acquire or otherwise beneficially own more than 20% of the Company’s outstanding voting securities. Under the Icahn Agreements, if the Icahn Group ceases to hold a “net long position,” as defined in the Nomination and Standstill Agreement, in at least 1,900,000 shares of the Company’s common stock, the Icahn Group will cause one Icahn Designee to resign from the Company’s board of directors; if the Icahn Group’s holdings are further reduced to specified levels, additional Icahn Designees are required to resign.

In addition, pursuant to the Icahn Agreements, the Company entered into a registration rights agreement, effective June 30, 2016 (the "Registration Rights Agreement"), with High River Limited Partnership, Icahn Partners LP and Icahn Partners Master Fund LP, on behalf of any person who is a member of the "Icahn group" (as such term is defined therein) who owns applicable securities at the relevant time and is or has become a party to the Registration Rights Agreement. The Registration Rights Agreement provides for customary demand and piggyback registration rights and obligations.

Note 15—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”"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 will continuecontinues to have with New Hertz.
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HERC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited





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 regardingincluding (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.

Transition Services Agreement

The Company entered into a TSA pursuant to which New Hertz or its affiliates provide specified services to the Company on a transitional basis to help ensure an orderly transition following the Spin-Off. The TSA generally provides for a term of up to two years following the Spin-Off, though the recipient of the services may elect to terminate a service at any time upon advance written notice. During the three and nine months ended September 30, 2017, the Company incurred expenses of $4.2 million and $14.3 million, respectively, under the TSA which is included in "Direct operating" and "Selling, general and administrative" expenses in the Company's condensed consolidated statements of operations. During the three and nine months ended September 30, 2016, the Company incurred $5.6 million under the TSA.


Tax Matters Agreement


The Company entered into a tax matters agreement (the “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.

19
Employee Matters Agreement

The Company and New Hertz entered into an employee matters agreement to allocate liabilities and responsibilities relating to employment matters, employee compensation, benefit plans and programs and other related matters for current and former employees of the vehicle rental business and the equipment rental business.

Intellectual Property Agreement

The Company and New Hertz entered into an intellectual property agreement (the “Intellectual Property Agreement”) that provides for ownership, licensing and other arrangements regarding the trademarks and related intellectual property that New Hertz and the Company use in conducting their businesses. The Intellectual Property Agreement allocates ownership between New Hertz and the Company of all trademarks, domain names and certain copyrights that Hertz Holdings or its subsidiaries owned immediately prior to the Spin-Off.

Real Estate Arrangements

The Company and New Hertz entered into certain real estate lease agreements pursuant to which the Company leases certain office space from New Hertz and New Hertz leases certain rental facilities space from the Company. Rent payments were negotiated based on comparable fair market rental rates.

Note 16—Subsequent Events

Sale-leaseback Transaction

On October 10, 2017, Herc consummated a sale-leaseback transaction pursuant to which it sold 42 of its properties located in the U.S. for gross proceeds of approximately $119.5 million, and entered into a master lease agreement pursuant to which it will continue operations at those properties as a tenant. The lease agreement has an initial term of 20 years, subject to extension, at Herc's option, for up to five additional periods of five years each. The sale of the properties does not qualify for sale-leaseback
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HERC HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited



accounting. Therefore, the book value of the buildings and land will remain on the Company’s condensed consolidated balance sheet.
Notes Redemption

On October 20, 2017, pursuant to the terms of the supplemental indentures governing the Notes, for the redemption period from June 1, 2017 to May 31, 2018, Herc redeemed $61.0 million in aggregate principal amount of the 2022 Notes and $62.5 million in aggregate principal amount of the 2024 Notes at a redemption price of 103% of the aggregate principal amount plus accrued and unpaid interest thereon, if any, to, but not including, the date of redemption. Herc drew down on its ABL Credit Facility to fund the redemption.

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HERC HOLDINGS INC. AND SUBSIDIARIES

ITEM 2.
ITEM 2.    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 Quarterly Report, on Form 10-Q (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 reserves for litigation and other contingencies, accounting for income taxes, pension and postretirement benefits,receivables allowances, depreciation of revenue earningrental 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, allowancesreserves for accounts receivablelitigation 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 unaudited 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 serviceservices 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"Liquidity and Capital Resources”Resources" below.


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


•Equipment rental (includes all revenue associated with the rental of equipment including ancillary revenue from delivery, rental protection programs and fueling charges);
•Sales of revenue earningrental equipment and sales of new equipment, parts and supplies; and
•Service and other revenuesrevenue (primarily relating to training and labor provided to customers).


Our expenses primarily consist of:


•Direct operating expenses (primarily wages and related benefits, facility costs and other costs relating to the operation and rental of revenue earningrental equipment, such as delivery, maintenance and fuel costs);
•Cost of sales of revenue earningrental equipment, new equipment, parts and supplies;
•Depreciation expense relating to revenue earningrental equipment;
•Selling, general and administrative expenses;
•Non-rental depreciation and amortization; and
•Interest expense.


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HERC HOLDINGS INC. AND SUBSIDIARIES

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

Economic Conditions

Despite continued economic uncertainty, elevated interest rates, potential labor disruptions, and inflation, the equipment rental industry remains resilient, as demonstrated by the increase in volume in the current quarter. We actively monitor the impact of the dynamic macroeconomic environment and manage our business to adjust to such conditions. Interest rates on our debt instruments remain elevated; most notably, the weighted average interest rate on our floating rate debt has increased from 6.24% in the first quarter of 2023 to 6.82% in the current quarter. We monitor our exposure to floating rate debt and reevaluate our capital allocation strategy, as necessary. In response to supply chain disruptions easing in certain categories of equipment, we continue to increase the volume of sales of rental equipment, remaining mindful to the possibility we may experience more severe supply chain disruptions in the future. Although inflation appears to have stabilized, we have experienced and expect to continue to experience inflationary pressures, a portion of which, such as for fuel and delivery, is passed on to customers. There are other 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.

Seasonality


Our business is seasonal, with demand for our rental equipment tending to be lower in the winter months.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
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HERC HOLDINGS INC. AND SUBSIDIARIES

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

profitability in periods when our revenues are higher, and lower profitability in periods when our revenues are lower. In an effort toTo reduce the impactsimpact of seasonality, we are focused on expanding our customer base through specialty products that serve different industries with less seasonality and different business cycles.


RESULTS OF OPERATIONS
Three Months Ended March 31,
20242023ChangeChange
Equipment rental$719 $654 $65 10 %
Sales of rental equipment69 71 (2)(3)
Sales of new equipment, parts and supplies9 8 1 13 
Service and other revenue7 7 — — 
Total revenues804 740 64 9 
Direct operating307 281 26 9 
Depreciation of rental equipment160 152 8 5 
Cost of sales of rental equipment46 46 — — 
Cost of sales of new equipment, parts and supplies6 5 1 20 
Selling, general and administrative115 106 9 8 
Non-rental depreciation and amortization29 26 3 12 
Interest expense, net61 48 13 27 
Other expense (income), net(1)1 (2)(200)
Income before income taxes81 75 6 8 
Income tax provision(16)(8)(8)100 
Net income$65 $67 $(2)(3)%
 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions)2017 2016 $ Change % Change 2017 2016 $ Change % Change
Equipment rentals$413.1
 $360.3
 $52.8
 14.7 % $1,084.5
 $996.0
 $88.5
 8.9 %
Sales of revenue earning equipment27.7
 24.9
 2.8
 11.2
 128.5
 94.0
 34.5
 36.7
Sales of new equipment, parts and supplies13.9
 15.7
 (1.8) (11.5) 40.3
 50.9
 (10.6) (20.8)
Service and other revenues2.9
 2.7
 0.2
 7.4
 9.5
 8.7
 0.8
 9.2
Total revenues457.6
 403.6
 54.0
 13.4
 1,262.8
 1,149.6
 113.2
 9.8
Direct operating188.2
 169.9
 18.3
 10.8
 526.2
 487.8
 38.4
 7.9
Depreciation of revenue earning equipment96.3
 89.1
 7.2
 8.1
 283.5
 255.1
 28.4
 11.1
Cost of sales of revenue earning equipment28.6
 27.5
 1.1
 4.0
 134.9
 111.6
 23.3
 20.9
Cost of sales of new equipment, parts and supplies10.8
 12.1
 (1.3) (10.7) 30.3
 39.2
 (8.9) (22.7)
Selling, general and administrative84.6
 66.8
 17.8
 26.6
 244.6
 203.5
 41.1
 20.2
Impairment—
 —
 —
 —
 29.3
 —
 29.3
 NM
Interest expense, net32.4
 32.3
 0.1
 0.3
 101.8
 52.1
 49.7
 95.4
Other expense (income), net(1.9) (0.8) (1.1) NM
 (2.3) (2.2) (0.1) 4.5
Income (loss) before income taxes18.6
 6.7
 11.9
 NM
 (85.5) 2.5
 (88.0) NM
Income tax benefit (provision)(5.8) (3.7) (2.1) 56.8
 31.5
 (9.0) 40.5
 NM
Net income (loss)$12.8
 $3.0
 $9.8
 NM
 $(54.0) $(6.5) $(47.5) NM

NM - Not Meaningful

Three Months Ended September 30, 2017 Compared with Three Months Ended September 30, 2016

Equipment rental revenues increased $52.8 million, or 14.7%, in the three months ended September 30, 2017 when compared with the prior-year period. The increase was attributable to a higher level of revenue earning equipment on rent resulting from diversifying and growing our customer base through increases in our ProSolutionsTM and ProContractorproduct offerings. Additionally, pricing increased by 1.7% during the third quarter of 2017 as compared to the third quarter of 2016.

Sales of revenue earning equipment increased $2.8 million, or 11.2%, during the third quarter of 2017 as compared to the prior-year period. During the third quarter of 2017, the level of revenue earning equipment sold increased compared to the same period in 2016 as part of our strategy to shift the mix of our fleet. The corresponding cost of sales of revenue earning equipment as a percentage of the related revenue was 103.2% in the third quarter of 2017 compared to 110.4% in the third quarter of 2016. The improvement in margin is due to a reduction in the volume of sales made through the lower-margin auction channel and a shift toward the wholesale channel.

Sales of new equipment, parts and supplies decreased $1.8 million, or 11.5%, during the third quarter of 2017 when compared with the prior-year period. This decrease was driven by our implementation of changes to de-emphasize new equipment sales programs. The cost of sales of new equipment, parts and supplies as a percentage of the related revenue was 77.7% for the third quarter of 2017 compared to 77.1% for the third quarter of 2016. The increase was due to the mix of the new equipment sold.


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HERC HOLDINGS INC. AND SUBSIDIARIES

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


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

Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023

Equipment rental revenue increased $65 million, or 10%, during the first quarter of 2024 due to higher volume of equipment on rent of 8.0% and pricing growth of 5.1% over the same period in the prior year.

Sales of rental equipment decreased $2 million, or 3%, during the first quarter of 2024 when compared to the first quarter of 2023. We continue to sell equipment in line with our fleet rotation planning to improve the equipment mix and manage fleet age. The margin on sales of rental equipment was 33% in 2024 compared to 35% in 2023. The slight decrease in margin on sale of rental equipment in 2024 was primarily due to mix of equipment sold.

Direct operating expenses in the first quarter of 2024 increased $18.3$26 million, or 10.8%9%, in the third quarter of 2017 when compared to the thirdfirst quarter of 2016 primarily due2023. Direct operating expenses were 42.7% of equipment rental revenue in 2024, compared to 43.0% in the following:

Fleetprior-year period, reflecting better cost performance and relatedfixed cost absorption on higher revenue despite increases in (i) personnel-related expenses of $17 million resulting from increased $11.0headcount in support of growth initiatives, (ii) facilities expense of $5 million primarily as a result of higher delivery, freightwe have added more locations through acquisitions and opening greenfield locations and (iii) maintenance expense of $10.4 million due to an increase in deliveries associated with higher equipment rental revenues.

Personnel-related expenses increased $5.2 million as a result of an increase in salary expense primarily associated with continued investment in branch management to drive operational improvements and investments in branch operating personnel to support revenue growth.

Other direct operating costs increased $2.1 million primarily due to higher depreciation of $1.4 million resulting from the addition of new service vehicles and higher facilities expense of $1.2$5 million related to new locations.

Depreciation of revenue earning equipmentour increased $7.2 million, or 8.1%, in the third quarter of 2017 when compared with the same period in 2016. The increase was due to a larger fleet size in the third quarter of 2017 as compared to the same period in 2016 and an increase of $3.9 million due to the impact of the 2016 reduction in residual values and the planned holding period of certain classes of equipment.

Selling, general and administrative expenses increased $17.8 million, or 26.6%, in the third quarter of 2017 compared to the prior-year period. The increase is primarily due to a $6.2 million increase in provision for bad debt attributable to higher revenue and levels of receivables, a $4.8 million increase for additional sales personnel and related commissions to drive revenue growth, and higher information technology costs related to the Spin-Off of $4.0 million.

Income tax provision was $5.8 million for the three months ended September 30, 2017 compared to $3.7 million for the same period in 2016. Income tax provision in 2017 was primarily driven by pre-tax income, partially offset by non-deductible expenses and valuation allowances recorded on losses generated by foreign loss jurisdictions. Income tax provision in the comparable period of 2016 was primarily driven by certain nondeductible charges within the quarter.

Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016

Equipment rental revenues increased $88.5 million, or 8.9%, during the nine months ended September 30, 2017 when compared with the prior-year period. The increase was attributable to a higher level of revenue earning equipment on rent resulting from higher demand from existing customers as well as diversifying and growing our customer base through increases in our ProSolutionsTM and ProContractorproduct offerings. Additionally, pricing increased by 1.4% during the nine months ended September 30, 2017 as compared to the same period in 2016.

Sales of revenue earning equipment increased $34.5 million, or 36.7%, during the nine months ended September 30, 2017 when compared to the prior-year period. During 2017, the level of revenue earning equipment sold increased as part of our strategy to shift the mix of our fleet as well as higher sales due to the rotation of our revenue earning equipment based on normal holding periods. The corresponding cost of sales of revenue earning equipment as a percentage of the related revenue was 105.0% in 2017 compared to 118.7% in 2016. Losses on the sale of revenue earning equipment decreased in 2017 as the volume of sales made through the lower-margin auction channel was reduced and shifted toward the wholesale channel. The loss on sale of revenue earning equipment in 2016 was primarily due to the higher level of sales through the auction channel of equipment used in the upstream oil and gas markets and equipment manufactured by certain suppliers as we reduced the number of brands of equipment we carry in our fleet.

Sales of new equipment, parts and supplies decreased $10.6 million, or 20.8%, during the nine months ended September 30, 2017 when compared with the prior-year period. This decrease was driven by our implementation of changes to de-emphasize new equipment sales programs, including the elimination of certain equipment dealerships. The cost of sales of new equipment, parts and supplies as a percentage of the related revenue was 75.2% for the nine months ended September 30, 2017 compared to 77.0% for the same period of 2016. The decrease was due to the mix of the new equipment sold.


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HERC HOLDINGS INC. AND SUBSIDIARIES

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

Direct operating expenses increased $38.4 million, or 7.9%, in the nine months ended September 30, 2017 when compared to the prior-year period primarily due to the following:

Fleet and related expenses increased $18.4 million primarily as a result of higher delivery and freight expense of $12.9 million mainly due to an increase in deliveries associated with higher equipment rental revenues. Additionally, fuel expense increased by $4.1 million driven by higher gas prices and sales volume during the nine months ended September 30, 2017 as compared to the prior-year period.

Personnel-related expenses increased $14.9 million as a result of an increase in salary expense of $12.9 million primarily associated with continued investment in branch management to drive operational improvements and investments in branch operating personnel to support revenue growth. Additionally, there was an increase in benefits expense of $1.5 million primarily due to higher healthcare insurance costs as a stand-alone company.

Other direct operating costs increased $5.1 million primarily due to increased depreciation of $5.1 million related to the increase in service vehicles and higher facilities expense of $4.4 million due to new locations.2024. These increases were partially offset by a decrease in restructuringfuel expense of $2.4$4 million resulting from charges taken for several location closures during 2015 and 2016.due to lower average fuel prices in the first quarter of 2024.


Depreciation of revenue earningrental equipment increased $28.4$8 million, or 11.1%5%, during the nine months ended September 30, 2017first quarter of 2024 when compared with the prior-year period. The increase was due to a larger fleet size in the nine months ended September 30, 2017 as compared to the same period in 2016 andfirst quarter of 2023 due to an increase of $16.3in average fleet size. Non-rental depreciation and amortization increased $3 million, or 12%, primarily due to the impactamortization of the 2016 reduction in residual values and the planned holding period of certain classes of equipment.intangible assets related to acquisitions.


Selling, general and administrative expenses increased $41.1$9 million, or 20.2%8%, duringin the nine months ended September 30, 2017first quarter of 2024 when compared to the prior-year period.first quarter of 2023. The increase iswas primarily due to higher stand-alone public company costs during the first halfincreases in selling expenses, including commissions and other variable compensation, of 2017$4 million, advertising and information technology costs related to the Spin-Offtravel expense of $21.4 million, a $10.9 million increase for additional sales personnel and related commissions to drive revenue growth, and an $8.4 million increase in provision for bad debt attributable to higher revenue and levels of receivables.

Impairment charges of $29.3 million were recorded during the nine months ended September 30, 2017. The impairments related to the write-off of intangible assets previously capitalized as part of the development of new financial and point of sale systems of $26.2$3 million, and general payroll and benefits of $2 million. Selling, general and administrative expenses were 16.0% of equipment rental revenue in 2024 compared to 16.2% in the impairment of certain revenue earning equipment of $3.1 million that was deemed held for sale at September 30, 2017. See Note 4, "Intangible Asset Impairment" and Note 3, "Revenue Earning Equipment," respectively,prior-year period due to the notes to our condensed consolidated financial statements for further information.continued focus on improving operating leverage while expanding revenues.


Interest expense, net increased $49.7$13 million, or 27%, during the nine months ended September 30, 2017first quarter of 2024 when compared towith the prior-year periodfirst quarter of 2023 due to interest incurredincreased borrowings on the Notes issued in June 2016, a loss on the early extinguishment of 10% of the Notes, and borrowings under the ABL Credit Facility. The increases were partially offset by decreasesFacility primarily to fund acquisition growth and invest in rental equipment and higher interest rates on the Predecessor ABL Facility and loans from THC and its affiliates, which were settled as part of the Spin-Off in June 2016.floating rate debt.


Income tax benefitprovision was $31.5$16 million, forwith an effective tax rate of 20%, during the nine months ended September 30, 2017first quarter of 2024 compared to an income tax provision of $9.0$8 million forand 11% in the same period in 2016.of 2023. The income tax benefit during the nine months ended September 30, 2017rate increase was primarily driven by pre-tax losses, partially offset by non-deductible expenses and valuation allowances recorded on losses generated by foreign loss jurisdictions. Income tax provisiona reduction in the comparable period of 2016 was primarily driven by $6.4 million of tax expensebenefit related to state taxes incurred as a result of the Spin-Off. The effective tax rate for the 2017 fiscal year is expected to be approximately 37%.stock-based compensation and certain non-deductible expenses.


LIQUIDITY AND CAPITAL RESOURCES


Our primary uses of liquidity needs include the payment of operating expenses, purchases of rental equipment to be used in our operations, and servicing of debt.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 September 30, 2017,March 31, 2024, we had approximately $2.2$3.8 billion of total nominal indebtedness outstanding. We are highly leveraged and a substantial portion of our liquidity needs arise from debt service on our indebtedness and from the funding of our costs of operations and capital expenditures.
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Our liquidity as of September 30, 2017March 31, 2024 consisted of cash and cash equivalents of $63 million and unused commitments of approximately $1.3 billion under our ABL Credit Facility and AR Facility. See "Borrowing Capacity and Availability" below.below for further discussion. Our practice is to maintain sufficient liquidity through cash from operations, and our ABL Credit Facility and our AR Facility 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 ABL Credit Facility and the AR Facility or other financing arrangements will be adequate to permit ussufficient to meet our obligationsworking capital requirements and anticipated capital expenditures, and other strategic uses of cash, if any, and debt payments, if any, over the next twelve months.


On October 10, 2017, Herc consummated a sale-leaseback transaction pursuant to which it sold 42
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Table of its properties located in the U.S. for gross proceeds of approximately $119.5 million, and entered into a master lease agreement pursuant to which it will continue operations at those properties as a tenant. The lease agreement has an initial term of 20 years, subject to extension, at Herc's option, for up to five additional periods of five years each. The sale of the properties does not qualify for sale-leaseback accounting. Therefore, the book value of the buildings and land will remain on the Company’s condensed consolidated balance sheet.Contents

HERC HOLDINGS INC. AND SUBSIDIARIES
On October 20, 2017, pursuant to the terms of the supplemental indentures governing the Notes, for the redemption period from June 1, 2017 to May 31, 2018, Herc redeemed $61.0 million in aggregate principal amount of the 2022 Notes and $62.5 million in aggregate principal amount of the 2024 Notes at a redemption price of 103% of the aggregate principal amount plus accrued and unpaid interest thereon, if any, to, but not including, the date of redemption. Herc drew down on its ABL Credit Facility to fund the redemption.

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

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.

Prior to the Spin-Off in 2016, as a subsidiary of Hertz Holdings, Herc's cash was swept regularly by Hertz Holdings at its discretion. Hertz Holdings also funded Herc's operating and investing activities as needed. Cash flows related to first half 2016 financing activities included changes in Hertz Holdings' investments in Herc. Transfers of cash to and from Hertz Holdings in the first half of 2016 are reflected within financing activities in our consolidated statements of cash flows.


The following table summarizes the change in cash and cash equivalents for the periods shown (in millions):
 Three Months Ended March 31,
20242023$ Change
Cash provided by (used in):
Operating activities$240 $235 $5 
Investing activities(296)(451)155 
Financing activities48 202 (154)
Effect of exchange rate changes— — — 
Net change in cash and cash equivalents$(8)$(14)$6 
 Nine Months Ended September 30,
 2017 2016 $ Change
Cash provided by (used in):     
Operating activities$249.9
 $370.9
 $(121.0)
Investing activities(289.1) (248.1) (41.0)
Financing activities33.0
 (94.6) 127.6
Effect of exchange rate changes1.3
 0.4
 0.9
Net change in cash and cash equivalents$(4.9) $28.6
 $(33.5)


Operating Activities


During the ninethree months ended September 30, 2017,March 31, 2024, we generated $121.0$5 million lessmore cash from operating activities compared with the same period in 2016.2023. The decreaseincrease was primarily related to a $59.7 million increase in interest payments as well as lower operating income resulting from higher information technology and other stand-alone public company costs, including the timing of collections ofpayments on accounts receivablepayable and payments of liabilities during the nine months ended September 30, 2017 as compared to the same period in 2016.accrued liabilities.

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Investing Activities


Cash used in investing activities increased $41.0decreased $155 million forduring the ninethree months ended September 30, 2017 asMarch 31, 2024 when compared towith the same period in 2016.prior-year period. Our primary use of cash in investing activities is for the acquisition of revenue earningrental equipment, and non-rental capital expenditures which increased primarily due to investments in our information technology, service vehicles and facilities as well as investments in rental earning equipment. We renewacquisitions. Generally, we rotate our equipment and manage our fleet of rental equipment in line with customer demand.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. Additionally, we closed on four acquisitions during the three months ended March 31, 2024 for a net cash outflow of $148 million.


Financing Activities


Cash flows fromprovided by financing activities increased $127.6decreased $154 million forduring the ninethree months ended September 30, 2017 asMarch 31, 2024 when compared towith the same period in 2016. Cash flows from financingprior-year period. Financing activities during the nine months ended September 30, 2017 primarily represents our changes in debt, which included the net draw downborrowings of $167.2$83 million on our revolving lines of credit partially offset byand securitization, which were used primarily to fund acquisitions and invest in rental equipment during the period. Net borrowings in the prior year period were $293 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 $123.5 millionthen-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 our Notes. Cash used in financing activities in 2016 mainly related to $2.1 billiona particular class or series, which could reduce the trading liquidity of financing and transfer activities with Hertz Holdings, which primarily funded our operations prior to the Spin-Off and was settled using total proceedssuch class or series.

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Table of $2.0 billion, net of issuance costs, from our Notes and ABL Credit Facility.Contents

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

Capital Expenditures


Our capital expenditures relate largely to purchases of revenue earningrental equipment, with the remaining portion representing purchases of property, equipment, and information technology. The table below sets forth the capital expenditures related to our revenue earningrental equipment and related disposals for the periods noted (in millions).
Three Months Ended March 31,
20242023
Rental equipment expenditures$181 $332 
Disposals of rental equipment(61)(49)
       Net rental equipment expenditures$120 $283 
  Nine Months Ended September 30,
  2017 2016
Revenue earning equipment expenditures $356.3
 $325.7
Disposals of revenue earning equipment (121.6) (99.0)
       Net revenue earning equipment expenditures $234.7
 $226.7
Net capital expenditures for revenue earningrental equipment increased $8.0decreased $163 million during the ninethree months ended September 30, 2017March 31, 2024 compared to the same period in 2016. During2023. As the 2017 period,supply chain constraints in several categories of equipment have eased, our rental equipment expenditures have returned to taking deliveries in line with our normal seasonal cadence, while we purchased more revenue earning equipmentcontinue to optimize our fleet by investing in high growth markets as part of our fleet mix transformation out of large earthmoving equipment and into more compact earthmoving, ProSolutionsTM and ProContractor equipment, which resulted in both higher expenditures and disposals during the period.
In fiscal 2017, we expect our net revenue earning equipmentlong-term capital expenditures to beexpenditure plans. Disposals have also slightly increased in the rangecurrent year to maintain an appropriate mix of $355 millionfleet and manage fleet age, while ensuring we have sufficient capacity of equipment to $365 million.

meet customer demand in light of some continuing supply chain constraints in certain equipment categories.
Borrowing Capacity and Availability


Our ABL Credit Facility providesand AR Facility (together, the "Facilities") provide our borrowing capacity and availability. Creditors under our ABL Credit Facilitythe Facilities have a claim on a specific poolpools of assets as collateral.collateral as identified in each credit agreement. Our ability to borrow under the ABL Credit FacilityFacilities 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 ABL Credit Facility and the Notes.Facility. None of such assets are available to satisfy the claims of our general creditors. See Note 8,11, "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 periodyear ended December 31, 20162023, and Note 8, "Debt" included in Part I, Item 1 "Financial Statements" of this Report for more information.

As of September 30, 2017, the following was available to us (in millions):
 
Remaining
Capacity
 
Availability Under
Borrowing Base
Limitation
ABL Credit Facility$652.5
 $652.5

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

In addition, as of September 30, 2017, the Company's subsidiary in China had uncommitted credit facilities of which $7.9 million was unutilized.


With respect to the ABL Credit Facility,Facilities, we refer to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the ABL Credit FacilityFacilities (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.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 facilityFacility (i.e., the amount of debt we could borrow given the collateral we possess at such time).


As of September 30, 2017,March 31, 2024, the following was available to us (in millions):
Remaining
Capacity		Availability Under
Borrowing Base
Limitation
ABL Credit Facility$1,300 $1,300 
AR Facility45 5 
Total$1,345 $1,305 

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


As of March 31, 2024, $27 million of standby letters of credit were issued and outstanding, none of which have been drawn upon. The ABL Credit Facility had $227.5$223 million available under the letter of credit facility sublimit, subject to borrowing base restrictions. As of September 30, 2017, $22.5 million of stand by letters of credit were issued and outstanding under the ABL Credit Facility, none of which have been drawn upon.


Covenants


Our ABL Credit Facility, our AR Facility and our 2027 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 ABL Credit Facility, our AR Facility and our 2027 Notes, we are not subject to ongoing financial maintenance covenants; however, under the 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. We are in compliance with our covenants asAs of September 30, 2017.March 31, 2024, the appropriate levels of liquidity have been maintained, therefore this financial maintenance covenant is not applicable.


At September 30, 2017,March 31, 2024, Herc Holdings' balance sheet was substantially identical to that of Herc, the borrower, with the exception of the debt held by Herc Holdings (2027 Notes and ABL Credit Facility) and certain components of shareholders equity. For the three and nine months ended September 30, 2017,March 31, 2024 and 2023, the statementstatements of operations of Herc Holdings and Herc were identical. Foridentical with the three and nine months ended September 30, 2016,exception of interest expense on the debt held at Herc Holdings that is not reflected in the statement of operations of Herc Holdings was substantially identical to that of Herc except for approximately $3.8 million, of interest expense to Hertz Holdings that is included in Herc Holdings' statement of operations for the nine months ended September 30, 2016, but is not included in Herc's statement of operations.Herc.


For further information on the terms of our Notes, ABL Credit Facility and China credit facilities, see Note 5, "Debt" to the notes to our condensed consolidated financial statements included in this Report. Additional information on the terms of our 2027 Notes, and ABL Credit Facility and AR Facility is also included in Note 8,11, "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 periodyear ended December 31, 2016.2023. For a discussion of the risks associated with our significant indebtedness, see Part I, Item 1A "Risk Factors" contained in our Annual Report on Form 10-K for the periodyear ended December 31, 2016.2023.


Dividends


Hertz Holdings did not historically pay dividends on the common stock. OurOn February 7, 2024, we declared a quarterly dividend of $0.665 per share to record holders as of February 21, 2024, with payment date of March 7, 2024. 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. As of the date of this Report, we have no plans to pay dividends on our common stock.


CONTRACTUAL OBLIGATIONS

As of September 30, 2017, there have been no material changes outside of the ordinary course of business to our known contractual obligations as set forth in the Contractual Obligations table included in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the period ended December 31, 2016.

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

OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS


As of September 30, 2017,March 31, 2024, there have been no material changes to our indemnification obligations as disclosed in Note 14,17, “Commitments and Contingencies” in our Annual Report on Form 10-K for the periodyear ended December 31, 2016.

The2023. For further information, concerningsee the ongoing securities litigation, governmental investigations and other contingencies, including environmental contingencies and the amount currently held in reserve for environmental matters, containeddiscussion on indemnification obligations included in Note 10,12, "Commitments and Contingencies" to our unaudited condensed consolidated financial statements included in Part I, Item 1 "Financial Statements" of this Report is incorporated herein by reference.Report.


For information concerning contingencies, see Note 12, "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 Recently IssuedSignificant Accounting Pronouncements" to the notes to our condensed consolidated financial statements includedPolicies" in Part I, Item 1 "Financial Statements" of this Report.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report includes "forward-looking statements," as that term is defined by the federal securities laws. Forward-looking statements include statements concerning our plans, intentions, objectives, goals, strategies, forecasts, future events, future revenue or performance, capital expenditures, financing needs, business trends and other information that is not historical information. When used in this Report, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts," and future or conditional verbs, such as "will," "should," "could" or "may," as well as variations of such words or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements are so designated. All forward-looking statements, including, without limitation, management's examination of historical operating trends and data, 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 management's expectations, beliefs and projections will be achieved.

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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 in Part I under Item 1A “Risk Factors,” including:

Risks related to material weaknesses in our internal control over financial reporting and the restatement of financial statements previously issued by Hertz Holdings, including that: we have identified material weaknesses in our internal control over financial reporting that may adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, which may adversely affect investor and lender confidence in us and, as a result, the value of our common stock and our ability to obtain future financing on acceptable terms, and we may identify additional material weaknesses as we continue to assess our processes and controls as a stand-alone company with lower levels of materiality; our efforts to design and implement an effective control environment may not be sufficient to remediate the material weaknesses, or to prevent future material weaknesses; such material weaknesses could result in a material misstatement of our consolidated financial statements that would not be prevented or detected; we receive certain transition services from New Hertz pursuant to the transition services agreement covering information technology services and other areas, which impact our control environment and, therefore, our internal control over financial reporting; we continue to expend significant costs and devote management time and attention and other resources to matters related to our internal control over financial reporting; our material weaknesses and Hertz Holdings' restatement could expose us to additional risks that could materially adversely affect our ability to execute our strategic plan and our financial position, results of operations and cash flows, including as a result of events of default under the agreements governing our indebtedness and/or government investigations, regulatory inquiries and private actions; we may experience difficulties implementing new information technology systems, including the migration of systems from New Hertz; we could experience disruptions to our control environment in connection with the relocation of our Shared Services Center, including as a result of the failure to retain key employees who possess specific knowledge or expertise necessary for the timely preparation of our financial statements; and Hertz Holdings' restatement has resulted in government investigations, books and records demands, and private litigation and could result in government enforcement actions and private
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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

litigation that could have a material adverse impact on our results of operations, financial condition, liquidity and cash flows;

Risks related to the Spin-Off, which effected our separation from New Hertz, such as: we have limited operating history as a stand-alone public company, and our historical financial information for periods prior to July 1, 2016, is not necessarily representative of the results that we would have achieved as a separate, publicly traded company, and may not be a reliable indicator of our future results; the liabilities we have assumed and will share with New Hertz in connection with the Spin-Off could have a material adverse effect on our business, financial condition and results of operations; if there is a determination that any portion of the Spin-Off transaction is taxable for U.S. federal income tax purposes, including for reasons outside of our control, then we and our stockholders could incur significant tax liabilities, and we could also incur indemnification liability if we are determined to have caused the Spin-Off to become taxable; if New Hertz fails to pay its tax liabilities under the Tax Matters Agreement or to perform its obligations under the Separation and Distribution Agreement, we could incur significant tax and other liability; our ability to engage in financings, acquisitions and other strategic transactions using equity securities is limited due to the tax treatment of the Spin-Off; the loss of the Hertz brand and reputation could materially adversely affect our ability to attract and retain customers; the Spin-Off may be challenged by creditors as a fraudulent transfer or conveyance; and if the Spin-Off is not a legal dividend, it could be held invalid by a court and have a material adverse effect on our business, financial condition and results of operations;

Business risks could have a material adverse effect on our business, results of operations, financial condition and/or liquidity, including:

the cyclicality of our business, a slowdown in economic conditions or adverse changes in the economic factors specific to the industries in which we operate, in particular industrial and construction;

the dependence of our business on the levels of capital investment and maintenance expenditures by our customers, which in turn are affected by numerous factors, including the level of economic activity in their industries, the state of domestic and global economies, global energy demand, the cyclical nature of their markets, expectations regarding government spending on infrastructure improvements or expansions, their liquidity and the condition of global credit and capital markets;

we may experience significant difficulties, delays and/or significant costs from a number of information technology systems projects, including the movement of our point of sale system from the New Hertz system to our own and the migration of our financial system from the New Hertz system to a stand-alone system, each of which will continue to require significant investment of human and financial resources, and any significant disruption from either migration could materially adversely affect our business, results of operations, financial condition, cash flows, ability to report accurate financial results and our control environment;

we may have difficulty obtaining the resources that we need to operate, or our costs to do so could increase significantly;

intense competition in the industry, including from our own suppliers, that may lead to downward pricing or an inability to increase prices;

any occurrence that disrupts rental activity during our peak periods given the seasonality of the business, especially in the construction industry;

doing business in foreign countries exposes us to additional risks, including under laws and regulations that may conflict with U.S. laws and those under anticorruption, competition, economic sanctions and anti-boycott regulations;

our success as an independent company will depend on our new senior management team, the ability of other new employees to learn their new roles, and our ability to attract and retain key management and other key personnel;
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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


some or all of our deferred tax assets could expire if we experience an “ownership change” as defined in the Internal Revenue Code;

changes in the legal and regulatory environment that affect our operations, including with respect to taxes, consumer rights, privacy, data security and employment matters, could disrupt our business and increase our expenses;

an impairment of our goodwill or our indefinite lived intangible assets could have a material non-cash adverse impact;

other operational risks such as: any decline in our relations with our key national account customers or the amount of equipment they rent from us; our equipment rental fleet is subject to residual value risk upon disposition, and may not sell at the prices we expect; we may be unable to protect our trade secrets and other intellectual property rights; we may fail to respond adequately to changes in technology and customer demands; our business is heavily reliant upon communications networks and centralized information technology systems and the concentration of our systems creates or increases risks for us, including the risk of the misuse or theft of information we possess, including as a result of cyber security breaches or otherwise, which could harm our brand, reputation or competitive position and give rise to material liabilities; failure to maintain, upgrade and consolidate our information technology networks could materially adversely affect us; we may face issues with our union employees; we are exposed to a variety of claims and losses arising from our operations, and our insurance may not cover all or any portion of such claims; environmental, health and safety laws and regulations and the costs of complying with them, or any change to them impacting our customers’ markets, could materially adversely affect us; decreases in government spending could materially adversely affect us and a lack of or delay in additional infrastructure spending may have a material adverse effect on our share price; maintenance and repair costs associated with our equipment rental fleet could materially adversely affect us; and strategic acquisitions could be difficult to identify and implement and could disrupt our business or change our business profile significantly;

Risks related to our substantial indebtedness, such as: our substantial level of indebtedness exposes us or makes us more vulnerable to a number of risks that could materially adversely affect our financial condition, results of operations, cash flows, liquidity and ability to compete; the secured nature of our indebtedness, which is secured by substantially all of our consolidated assets, could materially adversely affect our business and holders of our debt and equity; an increase in interest rates or in our borrowing margin would increase the cost of servicing our debt and could reduce our profitability; and any additional debt we incur could further exacerbate these risks;

Risks related to the securities market and ownership of our stock, including that: the market price of our common stock may fluctuate significantly; the market price of our common stock could decline as a result of the sale or distribution of a large number of our shares or the perception that a sale or distribution could occur and these factors could make it more difficult for us to raise funds through future stock offerings; and provisions of our governing documents could discourage potential acquisition proposals and could deter or prevent a change in control; and

Other risks and uncertainties set forth in our Annual Report on Form 10-K for the year ended December 31, 2016, in this Report and in our other filings with the SEC.

All forward-looking statements are expressly qualified in their entirety by such cautionary statements. We do not undertake any obligation to release publicly any update or revision to any of the forward-looking statements.

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HERC HOLDINGS INC. AND SUBSIDIARIES



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.


There isAs of March 31, 2024, 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 periodyear ended December 31, 2016.2023.


ITEM 4.    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 the Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Report. report.Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2017, due to the identification of material weaknesses in our internal control over financial reporting previously identified and reported in our Annual Report on Form 10-K for the year ended DecemberMarch 31, 2016 (the “2016 Form 10-K”),2024, our disclosure controls and procedures were not 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 and the rules promulgated thereunder, 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.


Previously Reported Material WeaknessesChanges in Internal Control overOver Financial Reporting


Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). As reported in our 2016 Form 10-K, we did not maintain effective internal control over financial reporting as of December 31, 2016 as a result of material weaknesses in the Control Environment, Risk Assessment and Monitoring areas which continue to exist as of September 30, 2017. A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Refer to Item 9A in our 2016 Form 10-K for a description of our material weaknesses and remediation efforts undertaken by management.

Remediation Efforts and Status of Previously Reported Material Weaknesses

Our material weaknessesThere were not remediated at September 30, 2017; however, during the nine months ended September 30, 2017, we have undertaken steps toward remediation of the material weaknesses identified in our internal control over financial reporting. Our Board of Directors and management take internal control over financial reporting and the integrity of the Company’s financial statements seriously and believe that the steps described below are essential to implementing strong and effective internal control over financial reporting and a strong internal control environment.
Our management continues to strengthen our internal control over financial reporting and to remediate the material weaknesses identified in the 2016 Form 10-K, including assessing the additional remediation steps needed and implementing measures to remediate the underlying causes that gave rise to the material weaknesses.
The following steps are among the measures taken by the Company in addition to continuing the remediation efforts described in Item 9A in our 2016 Form 10-K:
We are continuing efforts to improve our complement of personnel with the requisite skillsets in certain areas integral to financial reporting. We enhanced the accounting and finance team by increasing the number of roles and hiring additional individuals with appropriate knowledge, skills and experience commensurate with the financial reporting complexities of the organization. Two key accounting positions, Controller and Chief Accounting Officer and Assistant Controller, have been filled or replaced by the Company and other senior accounting personnel have been
HERC HOLDINGS INC. AND SUBSIDIARIES

ITEM 4. CONTROLS AND PROCEDURES (continued)

hired during the nine months ended September 30, 2017. Additionally, we reorganized our accounting team and reassigned responsibilities to strengthen the performance and review of processes and to evaluate, implement and maintain enhancements to our internal control over financial reporting.
We have provided, and will continue to provide, ongoing training for dedicated resources with assigned responsibility and accountability for financial reporting processes and internal controls. Training has included comprehensive internal controls training and training focused on upgrading the skills of our accounting personnel with respect to the application of U.S. GAAP updates.
We have established a task force and assigned a working group to each of the material weaknesses, as appropriate. These groups are focused on improving the design and operating effectiveness of the controls. The groups meet regularly and include members of senior management to strengthen accountability and prioritization of corrective actions.
We are continuing our efforts in performing enterprise-wide risk assessment to identify, design, implement and re-evaluate our control activities related to internal control over financial reporting, including monitoring controls related to the design and operating effectiveness of certain control activities.
We have been actively engaged in and are continuing the process of designing, developing, implementing and testing processes and procedures, and will continue to devote significant time and attention to the remediation of our material weaknesses.
We continue to enhance our risk-based internal audit function, which reports directly to our Audit Committee. It has been staffed with qualified and seasoned professionals through direct hiring and a co-sourcing partnership to augment our internal resources. An enterprise-wide internal audit plan was established which includes operational, financial and compliance audits as well as addressing items that may be raised via the ethics hotline.
We are continuing efforts to address the material weakness identified regarding payroll. We have added incremental qualified resources and enhanced our policies and procedures over administering payroll to establish controls that are properly executed, supported by adequate documentation and are independently reviewed and approved.
The Audit Committee of the Board of Directors is monitoring management's ongoing remediation efforts. With the Audit Committee's oversight, management has dedicated significant resources and efforts to improve our internal control environment to remedy the identified material weaknesses. As we continue to evaluate and implement improvements to our internal control over financial reporting, our management may decide to take additional measures to address our control deficiencies or to modify the remediation efforts undertaken. Because the reliability of the internal control process requires repeatable execution, our material weaknesses cannot be considered fully remediated until all remedial processes and procedures (including additional remediation efforts identified by our senior management as necessary) have been implemented, each applicable control has operated for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively. Until all identified material weaknesses are remediated, we will not be able to assert that our internal controls are effective. Further, management may identify other material weaknessesno changes in our internal control over financial reporting during this process.

Changes in Internal Control over Financial Reporting

Except for the changes noted above, there were no additional changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three monthsquarter ended September 30, 2017March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS


For a description of certain pending legal proceedings see Note 10,12, "Commitments and Contingencies" to the notes to our condensed consolidated financial statements in Part I, Item 1 "Financial Statements" of this Report.


ITEM 1A.    RISK FACTORS


ThereExcept as set forth below, there have been no material changes to the Company'sour risk factors from those previously disclosed under Part I, Item 1A, " Risk"Risk Factors" in our Annual Report on Form 10-K for the periodyear ended December 31, 2016.2023.



ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Share Repurchase Program


In March 2014, the Board approvedwe announced a $1 billion share repurchase program (the "share repurchase program""Share Repurchase Program"). There were no share repurchases, which replaced an earlier program. The Share Repurchase Program permits us to purchase shares through a variety of methods, including in the three months ended September 30, 2017. As of September 30, 2017, the approximate dollar value that remains available for purchases under the 2014 share repurchase program is $395.9 million. The program doesopen market or through privately negotiated transactions, in accordance with applicable securities laws. We are not obligate usobligated to make any repurchases at any specific time or in any specific situation.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,time-to-time, subject to legal and contractual requirements, without prior notice. For more information onThere were no share repurchases during the three months ended March 31, 2024. As of March 31, 2024, the approximate dollar value that remains available for share repurchase program, see Note 18, "Equity and Earnings (Loss) Per Share" to our condensed consolidated financial statements in Part II, Item 8 "Financial Statements" in our Annual Report on Form 10-K forpurchases under the period ended December 31, 2016.Share Repurchase Program is $161 million.


ITEM 5.    OTHER INFORMATION
None.
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ITEM 6.    EXHIBITS
Exhibit
Number		Description
Exhibit
Number		Description
3.1.1
3.1.2
3.1.3
3.1.4
3.2
31.1*10.1*
31.1*
31.2*
32.1**
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
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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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:April 23, 2024
Date:November 8, 2017
HERC HOLDINGS INC.

(Registrant)
By:/s/ BARBARA L. BRASIERMARK HUMPHREY
Barbara L. BrasierMark Humphrey
Senior Vice President and Chief Financial Officer

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