Hertz 2014 Annual Report Download - page 23

Table of Contents
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however, the location is not currently operational. The joint venture entity rents and sells equipment and tools to construction and industrial
markets throughout the Kingdom of Saudi Arabia.
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HERC operates in a wide range of customer segments across construction, infrastructure, industrial and specialty verticals. Key areas that HERC
serves under these verticals include commercial, engineering, oil and gas, petrochemical, railroads and entertainment. Serving a wide range of
industries enables HERC to reduce dependency on a single or limited number of customers and assists in reducing the seasonality of HERC's
revenues and its impact from any one segment's cycle. HERC operates in both small and large metropolitan markets which enables it to reduce
risk by having no single customer make up more than 3% of HERC's worldwide rental revenues for the year ended December 31, 2014. Of HERC's
North American rental revenues for the year ended December 31, 2014, approximately 38% of revenues were derived from construction activity,
26% from industrial activity, while the remaining revenues were generated by rentals to government, railroad, entertainment and other types of
customers.
HERC enters into rental agreements with companies, governmental bodies or other organizations seeking to rent HERC's assets. HERC delivers
much of its equipment to customer job sites and retrieves the equipment from the job sites upon conclusion of the rental. HERC extends credit
terms to many of its customers to pay for rentals.
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HERC acquires its equipment from a variety of manufacturers. The equipment is typically new at the time of acquisition and is not subject to any
repurchase program. The per-unit acquisition cost of units of rental equipment in HERC's fleet varies from under $100 to over $200,000. As of
December 31, 2014, the average per-unit acquisition cost (excluding small equipment purchased for less than $5,000 per unit) for HERC's fleet in
the U.S. was approximately $41,000 and the average age of HERC's worldwide rental fleet was 43 months.
HERC disposes of its used equipment through a variety of channels, including private sales to customers and other third parties, sales to
wholesalers, brokered sales and auctions.
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HERC licenses the Hertz name to equipment rental businesses in four countries in Europe, one country in the Middle East, one country in Central
Asia, one country in Central America and one country in South America. The terms of those licenses are broadly similar to those we grant to our
international car rental franchisees.
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HERC's competitors in the equipment rental industry range from other large national companies to regional and local businesses. In each of the
countries where HERC operates, the equipment rental industry is highly fragmented, with large numbers of companies operating on a regional or
local scale and the number of industry participants operating on a national scale being much smaller. HERC is one of the principal national-scale
industry participants in the U.S., Canada and France. HERC's operations in North America represented approximately 93% of our worldwide
equipment rental revenues during the year ended December 31, 2014. In the U.S. and Canada, the other top national-scale industry participants
are United Rentals, Inc., H&E Equipment Services, Inc. and Sunbelt Rentals. In France, the other principal national-scale industry participants are
Loxam and Kiloutou. Aggreko is a global competitor in the power generation rental markets in the same markets which HERC participates. In
China, the other principal national-scale industry participants are Zicheng Corporation, Jin He Yuan, Lei Shing Hong and Far East Rental. In Saudi
Arabia, the other principal national-scale industry participants are Bin Quraya, Al Zahid Tractors (CAT), Saudi Diesel, Rapid Access, Eastern
Arabia and Rental Solutions & Services (RSS) Saudi Ltd.
Competition in the equipment rental industry is intense, and it often takes the form of price competition. We believe that HERC's competitive
success has been primarily the product of its approximately 50 years of experience in the equipment rental industry, its systems and procedures
for monitoring, controlling and developing its branch network, its capacity to maintain a comprehensive rental fleet, the reliability and safety of its
equipment, the quality of its sales force and its established national accounts program.
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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