How did HRI's Q4 earnings surprise investors?

Herc Holdings (HRI) reported its fourth-quarter 2024 earnings on October 22, 2024, which revealed a significant decline in net income, missing expectations, yet the company's revenue exceeded forecasts, leading to a positive market reaction despite the earnings shortfall.

1. **Revenue Outperformance and Strategic Highlights**:
- **Revenue Achievement**: Herc Holdings posted a record equipment rental revenue of $839 million, marking a 12% year-over-year increase, and total revenues reached $951 million, up 14% from the previous year.
- **Strategic Growth**: The company's addition of 23 greenfield branches and 9 acquisitions, resulting in 28 new locations, contributed to its robust revenue growth.
2. **Earnings Shortfall and Market Reaction**:
- **Earnings Miss**: The reported net income for Q4 2024 was -$46 million, reflecting a substantial decline, and the company missed earnings per share (EPS) expectations, with an EPS of $3.58 compared to the forecasted $3.94.
- **Stock Price Movement**: Despite the earnings shortfall, the stock price rose by 1.48% to $210.94 following the earnings release, indicating investor confidence in the company's long-term prospects.

|code|Ticker|Name|Date|Percentage Change|Percentage Change YoY|market_code|
|---|---|---|---|---|---|---|
|HRI|HRI.N|Herc Holdings|20240102|-0.6985||169|
|HRI|HRI.N|Herc Holdings|20240103|-2.9422||169|
|HRI|HRI.N|Herc Holdings|20240104|-1.7909||169|
|HRI|HRI.N|Herc Holdings|20240105|-1.7101||169|
|HRI|HRI.N|Herc Holdings|20240108|2.4617||169|
|HRI|HRI.N|Herc Holdings|20240109|-1.7544||169|
|HRI|HRI.N|Herc Holdings|20240110|0.667||169|
|HRI|HRI.N|Herc Holdings|20240111|-0.0926||169|
|HRI|HRI.N|Herc Holdings|20240112|0.1355||169|
|HRI|HRI.N|Herc Holdings|20240116|0.0641||169|

3. **Adjusted Earnings Performance**:
- **Adjusted EPS and EBITDA**: The company reported an adjusted EPS of $12.88 per share, representing a 5% increase from the previous year, and adjusted EBITDA reached a record $470 million, marking a 14.7% increase.
- **Net Income Impact**: The net loss was primarily driven by a loss on Cinelease assets held for sale, which totaled $46 million.
4. **Investor Sentiment and Outlook**:
- **Earnings Call Insights**: The Q4 2024 earnings call highlighted Herc's robust performance amid challenges, with a focus on strategic growth initiatives and a positive outlook for 2025.
- **CapEx Plans**: The company announced plans for a significant capital expenditure (CapEx) of $700 million to $900 million for 2025, aimed at supporting mega-project demand and continuing its growth trajectory.

In conclusion, while Herc Holdings' Q4 2024 earnings fell short of expectations due to a significant net loss, the company's strong revenue outperformance, strategic growth initiatives, and positive market outlook for 2025 have likely contributed to investor confidence and a rise in stock price despite the earnings shortfall.