B
Overall grade
B
Financial quality
The sleeper story is that H&E's full 10% dis-synergy hit before closing, meaning they're starting integration from a reset baseline with potential upside if synergies work. While everyone focuses on the obvious $9.9B fleet and 3.8x leverage, the real constraint is H&E's accelerating revenue decline at -15% with pricing pressure that could undermine the $350M synergy math. Management's most telling quote: 'We believe that all of [the dis-synergies] came to fruition pre-close' suggests they're betting everything materialized upfront. My view changes if H&E's decline stabilizes above -10% or if they start quantifying actual synergy dollars within 90 days.
The 30-second version
- H&E acquisition dis-synergies accelerated to -15% revenue decline, but all of it hit BEFORE close
- Fleet sharing synergies happening immediately, but specialty cross-sell timeline unchanged
- Core Herc +4% growth looks solid, but they stopped breaking out local vs national account performance
What changed this quarter
| Metric | Prior | This quarter |
|---|---|---|
| Equipment Rental Revenue (ex-Cinelease) | $734M (+4.9% YoY in Q1) | $849M (+15.6% YoY, +4% organic) |
| Adjusted EBITDA (ex-Cinelease) | $339M (+2.7% YoY) | $390M (+15.1% YoY) |
| REBITDA Margin (ex-Cinelease) | Not disclosed | Declined 30 bps vs prior year |
| Free Cash Flow | $49M in Q1 | $270M in H1 net of transaction costs |
| Total Fleet OEC | $6.9B at Q1 end | $9.9B at Q2 end |
| Specialty Fleet % of OEC | 24% including Cinelease, 20% core | 18% total, 16% core ex-Cinelease |
| H&E Revenue Run Rate | Not applicable | -15% in Q2, worse expected in H2 |
| Leverage Ratio | 2.5x at Q1 end | 3.8x post-acquisition |
Accountability tracked
7 new promises made4 narrative shifts flagged6 prior promises graded
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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