HRI 10-K & 10-Q changes, risk factors and insider trading

We regularly possess, collect, receive, store, process, generate, use, disclose, transmit, protect, and handle non-public information about individuals and businesses, including both credit and debit card information and other proprietary, sensitive and confidential personal information (collectively, sensitive information). In addition, our customers regularly transmit sensitive information to us via the Internet and through other electronic means.

We rely heavily on communication networks, including the Internet and on IT systems, to process rental and sales transactions, manage our pricing, manage our equipment fleet, manage our financing arrangements, pay suppliers and other third parties, collect from our customers, account for our activities and otherwise conduct our business and report our financial results. Our major IT systems and accounting functions are centralized in a few locations. Any disruption, termination or substandard provision of these services, whether as the result of computer or telecommunications issues (including operational failures, server malfunctions, software bugs, software or hardware failures, loss of data or other IT assets, or similar), cyber attacks (such as computer malware, ransomware, business e-mail compromise, malicious code like viruses or worms, denial of service attacks, credential stuffing, credential harvesting, supply-chain attacks or other social engineering attacks like phishing attacks), personnel misconduct or error, localized conditions (such as a power outage, fire or explosion) or events or circumstances of broader geographic impact (such as an earthquake, storm, flood, other natural disaster, epidemic, strike, act of war, civil unrest or terrorist act), could materially adversely affect our business by disrupting normal operations. Cyber threats are increasing in number and sophistication, continually evolving, including with the increased use of artificial intelligence, making it difficult for us to anticipate and defend against such threats and vulnerabilities that can persist undetected over extended periods of time. In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive information and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.

Applicable data privacy and security obligations may require us to notify relevant stakeholders of security breaches. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. A security breach could adversely affect our corporate reputation as well as our operations, and could result in government enforcement actions, litigation against us, additional reporting requirements and/or oversight, restrictions on processing sensitive information, indemnification obligations, monetary fund diversions, interruptions in our operations, financial loss, the imposition of penalties, and other similar harms. A security breach and attendant consequences could cause the loss of customers, deter new customers from using our services, negatively impact our ability to grow and operate our business, and require that we invest significant additional resources related to our information security systems.

In addition, costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technologies, maintenance or adequate support of outdated or other existing systems and technologies could disrupt or reduce the efficiency of our business operations and could have an adverse effect on our operations if not anticipated and appropriately mitigated. OurFor competitive position may be adversely affected if we are unable to maintain, upgrade or replace systems and technologies that allow us to manageexample, our business inrelies a competitive manner. We also may not achieveon the benefitscontinued thatfunctionality weand anticipatereliability of customer-facing systems, such as ProControl by Herc Rentals™, to enable customers to rent equipment and access our services. Any disruption, failure, or degradation of these systems, whether due to technical issues, cyber incidents, or delays in maintenance or upgrades, could prevent customers from ancompleting upgradedtransactions, orimpair replacedcustomer systemsatisfaction, damage our reputation, weaken our relationships with customers and technology. Additionally, any failure of a system or technology could impede our ability to timely collect and report financial resultsresult in accordancelost withrevenue applicable laws and regulations.opportunities.

ITEMIn lA.recent RISKyears, FACTORSour (continued)industry has been characterized by rapid changes in technology and customer demands. For example, industry participants have taken advantage of new technologies, including digital tools, SaaS offerings and cloud computing, to improve fleet efficiency, decrease customer wait times and improve customer satisfaction. Our ability to continually improve our current processes and customer-facing tools in response to changes in technology or in customer expectations is essential in maintaining our competitive position and maintaining current levels of customer satisfaction. We may experience technical or other difficulties that could delay or prevent the development or implementation of new technologies. We also may not achieve the benefits that we anticipate from new technologies we develop or implement. The effects of these risks may, individually or in the aggregate, materially adversely affect our results of operations, liquidity and cash flows.

Our ability to successfully execute on our business plan depends upon the contributions of our senior management team as well as other key talenttalent, including our dedicated sales force and trades talenttalent, such as drivers and mechanics. In recent years, we have experienced increasing competition for available talent in the North American workforce as reflected by the low unemployment rate, shortages of available industry trades talent and increasing costs to retain employees. As a result, we could experience inefficiencies or a lack of business continuity due to employee turnover, new employees’ lack of historical knowledge and lack of familiarity with the business processes, operating requirements, purpose and culture, policies and procedures, and key information technologies and related infrastructure used in our day-to-day operations and financial reporting. Historically we have noted a ramp-up period before new members of our sales organization typically achieve a level of sales comparable to those we have employed for a longer period of time. We may also experience additional costs as new employees learn their roles and gain necessary experience, in addition to the cost of hiring new individuals. It is important to our success that newly hired team members quickly adapt to and excel in their new roles. If they are unable to do so, our business and financial results could be materially adversely affected. Further, if we cannot meet our needs for IT staff, we may not be able to fulfill our technology initiatives while continuing to provide maintenance on existing systems.

If we were to lose the services of members of our senior management team or other key talent, whether due to death, disability, resignation or termination of employment, our ability to successfully implement our business strategy, financial plans, marketing and other objectives could be significantly impaired. In addition, if we are unable to attract and retain qualified key talent, we may not be able to effectively and efficiently manage our business and execute our business plan.

Our operations are subject to numerous national, state, provincial and local laws and regulations governing environmental protection and occupational health and safety matters. These laws govern such issues as wastewater, storm water, solid and hazardous wastes and materials, air quality and matters of workplace safety. Under these laws and regulations, regardless of fault we may be liable for, among other things, the cost of investigating and remediating contamination at our sites as well as sites to which we have sent hazardous wastes for disposal or treatment, and also fines and penalties for non-compliance. We use hazardous materials to clean and maintain equipment, dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from storage tanks at certain of our locations. We also indemnify various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many

ITEM lA. RISK FACTORS (continued) hazardous materials to clean and maintain equipment, dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from storage tanks at certain of our locations. We also indemnify 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 expense or related natural resource damages for which we may be held responsible could be substantial. We cannot predict the potential financial impact on our business if adverse environmental, health, or safety conditions are discovered, or environmental, health, and safety requirements become more stringent. As of December 31, 20242025 and 2023,2024, the aggregate amounts accrued for environmental liabilities, including liability for environmental indemnities, reflected in the Company'sour consolidated balance sheets in "Accrued liabilities" were $0.5$0.4 million and $0.4$0.5 million, respectively. If we are required to incur environmental, health, or safety compliance or remediation costs that are not currently anticipated by us, our financial position, results of operations and cash flows could be materially adversely affected, depending on the magnitude of the cost.

In addition, New Hertz has assumed, among other things, liabilities associated with its vehicle rental business and related assets, whether such liabilities arose prior to or subsequent to the Spin-Off, and has agreed to indemnify us for any losses arising from such liabilities, as well as any other liabilities it assumed pursuant to the separation and distribution agreement. New Hertz also will be responsible for a portion (typically 85%) of certain shared liabilities not otherwise specifically allocated to New Hertz or us under the separation and distribution agreement. We rely on New Hertz to manage the defense and resolution of these shared liabilities. If New Hertz fails to satisfy its performance and payment obligations under the separation and distribution agreement, including its indemnification obligations, such failure could have a material adverse effect on our business, financial condition, results of operations and cash flows.

IfITEM ourlA. capitalRISK resourcesFACTORS (including borrowings under our financing arrangements and access to other refinancing indebtednesscontinued) and operating cash flows are not sufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced, among other things, to do one or more of the following: (i) sell certain of our assets; (ii) reduce the size of our rental fleet; (iii) reduce or delay capital expenditures; (iv) reduce or eliminate our dividend; (v) obtain additional equity capital; (vi) forgo business opportunities, including acquisitions and joint ventures; or (vii) restructure or refinance all or a portion of our debt before maturity. We cannot assure you that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. If we cannot refinance or otherwise pay our obligations as they mature and fund our liquidity needs, our business, financial condition, results of operations, cash flows, liquidity, ability to obtain financing and ability to compete could be materially adversely affected.

Substantially all of our consolidated assets, including our rental fleet, are subject to security interests under our revolving credit facility.facilities. As a result, the lenders under those financing arrangements have a secured claim on such assets in the event of our bankruptcy, insolvency, liquidation or reorganization, and we may not have sufficient funds to pay in full, or at all, all of our creditors or make any amount available to holders of our equity. The same is true with respect to structurally senior obligations. In general, all liabilities and other obligations of a subsidiary must be satisfied before the assets of such subsidiary can be made available to the unsecured or junior creditors (or equity holders) of the parent entity.

Because substantially all of our assets are encumbered under our revolving credit facility,facilities, our ability to incur additional secured indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have a material adverse effect on our financial flexibility and liquidity and force us to attempt to incur additional unsecured indebtedness, which may not be available to us.

•Direct operating expenses (primarily wages and related benefits, facility costs and other costs relating to the operation and rental of rental equipment, such as delivery, maintenance and fuel costs);

•Selling, general and administrative expenses; and

Interest expense, net increased $36$156 million, or 16%,60%, during the year ended 20242025 when compared with the2024 year ended 2023primarily due to higherthe averagenew debt balancesfacilities primarilyissued to fund the H&E acquisition growthat anda investweighted inaverage rentaleffective equipment.interest rate of 6.7%.

Loss on assets held for sale was $194$48 million during 20242025 to adjust the carrying value of Cinelease net assets to its fair value less estimated costs to sell.sell prior to its divestiture on July 31, 2025.

IncomeDue to the level of pretax income, the income tax provision and effective tax rate were zero during 2025. The income tax provision was $80 million during the year ended 2024 when compared with $100an millioneffective fortax therate sameof period27% in 2023.2024. The effective tax rate duringin 2024 was 27% compared to 22% in 2023. The rate increase was driven by non-deductible goodwill impairment of $14 million in 2024,million, a reductionbenefit inof the$3 benefitmillion related to stock-based compensation of $3 million in 2024 compared to $12 million in 2023, and certain other non-deductible expenses.

Our liquidity as of December 31, 20242025 consisted of cash and cash equivalents of $83$52 million and unused commitments of approximately $1.8$1.9 billion under our New ABL Credit Facility. See "Borrowing Capacity and Availability" below for further discussion. Our practice is to maintain sufficient liquidity through cash from operations, our New ABL Credit Facility and our AR Facility (together, the "Facilities") 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 FacilityFacilities or other financing arrangements will be sufficient to meet working capital requirements andrequirements, anticipated capital expenditures, and other strategic usespayment of cash, if any,dividends, and debt payments, if any, over the next twelve months.

During the year ended December 31, 2024,2025, we generated $139$140 million moreless cash from operating activities compared with the same period in 2023.2024. The increasedecrease was primarily related to improveddecreased operatingprofitability, resultscash primarilypaid resultingfor fromtransaction higherexpenses revenuesincurred coupledand withadditional improvedinterest operatingexpense leveragepayments onrelated costs,to collectionthe additional borrowings for the acquisition of receivables and the timing of payments on accounts payable and accrued liabilities.H&E.

Cash used in investing activities decreasedincreased $70$3.4 millionbillion during 20242025 when compared with the prior-year period. Our primary use of cash in investing activities isin 2025 was for acquisitions, the acquisition of rental equipment, and non-rental capital expenditures. Acquisition expenditures andof acquisitions.$4.3 billion were related to the cash portion of the H&E acquisition. Generally, we rotate our equipment and manage our fleet of rental equipment in line with customer 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 9 acquisitions during the year ended December 31, 2024 for a net cash outflow of $600 million, compared to cash outflow of $430 million during the year ended December 31, 2023.

Cash provided by financing activities decreasedincreased $213$3.5 millionbillion during 20242025 when compared with the prior-year. Financing activities primarily represent our changes in debt,debt. whichDuring included2025, thewe issuanceissued of$3.95 $800billion million ofin senior unsecured notes due 2029 which were used to repaynotes, a portion of our ABL Credit Facility, resulting in net repayments of $391$750 million term loan facility and borrowed $4.59 billion on our revolving lines of credit and securitization.securitization Borrowings on the ABL Credit Facilitywhich were used primarily to fund acquisitionsthe acquisition of H&E and invest in rental equipmentequipment. duringRepayments thetotaled period.$4.1 Netbillion borrowingsincluding inextinguishment of the prior yearrevolving periodline wereof $740credit million.and redemption of $1.2 billion of our senior unsecured notes due 2027. We

Net capital expenditures for rental equipment decreased $235$111 million during the year ended December 31, 20242025 compared to the same period in 2023,2024. asRental weequipment optimize our fleet by continuing to strategically invest in growth markets as part of our long-term capital expenditure plans. Expendituresexpenditures and disposals have decreasedincreased in the current year to maintainshift an appropriatethe mix of fleetfleet, drive revenue synergies and manageimprove fleet age as the supply chain constraints experienced over the last several years have resolved in most equipment categories.utilization.

Our ABL Credit Facility and AR Facility (together, the "Facilities") provide our borrowing capacity and availability. Creditors under the Facilities have a claim on specific pools of assets as collateral as identified in each credit agreement. Our ability to borrow under the Facilities 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."

During the third quarter of 2024,2025, we entered into an amendment toamended the AR Facility toin increase the aggregate commitments from $370 millionAugust to $400 million and extend the maturity to August 31, 2025.2026 and in December aggregate commitments were increased from $400 million to $475 million. See Note 11, "Debt" included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report for more information.

As of December 31, 2024,2025, $34$53 million of standby letters of credit were issued and outstanding, none of which have been drawn upon. The New ABL Credit Facility had $216$197 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.

Our New ABL Credit Facility, our AR Facility, our Term Loan Facility and our 20272029 Notes, our 2030 Notes, our 2031 Notes, our 2033 Notes, and 2029our 2034 Notes (collectively, the "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 New ABL Credit Facility, our AR Facility, our Term Loan Facility and our Notes, we are not subject to ongoing financial maintenance covenants; however, under the New 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. As of December 31, 2024,2025, the appropriate levels of liquidity have been maintained, therefore this financial maintenance covenant is not applicable.

At December 31, 2024,2025, Herc Holdings' balance sheet was substantially identical to that of Herc, with the exception of the debt held by Herc Holdings (2029 Notes, 2027Term NotesLoan Facility and New ABL Credit Facility) and certain components of shareholders equity. For the yearyears ended December 31, 20242025 and 2023,2024, the statements of operations of Herc Holdings and Herc were identical with the exception of interest expense on the debt held at Herc Holdings that is not reflected in the statement of operations of Herc.

For further information on the terms of our Notes, New ABL Credit Facility, Term Loan Facility and AR Facility see Note 11, "Debt" included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Report. For a discussion of the risks associated with our indebtedness, see Part I, Item 1A "Risk Factors" contained in this Report.

Certain of our accounting policies, as discussed below, involve a higher degree of judgment and complexity in their application and, therefore, represent the critical accounting policies used in the preparation of our financial statements. If different assumptions or conditions were to prevail, the results could be materially different from our reported results. For additional discussion of our critical accounting policies and estimates, as well as our significant accounting policies, see Note 2, "Basis of Presentation and Significant Accounting Policies" to the notes to our consolidated financial statements included in Part II, Item 8 of this Report.

Employee pension costs and obligations are dependent on assumptions used by actuaries in calculating such amounts. These assumptions include discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors. Actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense in such future periods. While we believe that the assumptions used are appropriate, significant differences in actual experience or significant changes in assumptions would affect our pension costs and obligations. The various employee-related actuarial assumptions (e.g., retirement rates, mortality rates and salary growth) used in determining pension costs and plan liabilities are reviewed periodically by management, assisted by the enrolled actuary, and updated as warranted. The discount rate used to value the pension liabilities and related expenses and the expected rate of return on plan assets are the two most significant assumptions impacting pension expense. The discount rate used is a market-based rate as of the valuation date. For the expected return on assets assumption, we use a forward-looking rate that is based on the expected return for each asset class (including the value added by active investment management), weighted by the target asset allocation. The past annualized long-term performance of the Plan's assets has generally been in line with the long-term rate of return assumption.

Local markets continue to be impacted by the elevated interest rate environment and continued economic uncertainty. Our diversification across industries and project types has contributed to the resiliency of our business and we believe the operating environment continues to favor equipment rental companies of scale. We have completed the integration of H&E and continue to focus on realizing the anticipated operational synergies from the acquisition.

We actively monitor the impact of the dynamic macroeconomic environment and manage our business to adjust to such conditions, including the impact of inflation, fuel prices due to the conflict in Iran, potential tariffs, interest rate fluctuations or supply chain disruptions, including:

Currently, we do not expect any direct impact of current macroeconomic conditions on our fleet procurement costs in 2026, however,though we cannotdo predictanticipate higher fuel costs in the extentshort toterm which could have a negative impact on our financial condition, results of operationsoperations. orHowever, cash flows will ultimately be impacted by these ongoing economic conditions. Wewe believe we are well-positioned to operate effectively through the present environment.

Our business is seasonal, with demand for our rental equipment tending to be lower in the winter 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 profitability in periods when our revenues are higher, and lower profitability in periods when our revenues are lower. To reduce the impact of seasonality, we are focused on expanding our customer base through products that serve different industries with less seasonality and different business cycles. Accordingly, results for interim periods are not necessarily indicative of a full year operating performance.

Three Months Ended MarchJune 31,30, 2026 Compared with Three Months Ended MarchJune 31,30, 2025

Equipment rental revenue increased $242$202 million, or 33%,23%, during the firstsecond quarter of 20262026, primarily reflecting anthe increaseadditional contribution from the H&E acquisition completed on June 2, 2025 and growth in average OEC on rent,rent whichparticularly includeson themega impact of the June 2025 acquisition of H&E.projects. On a pro forma basis including the standalone, pre-acquisition results of H&E, equipment rental revenue decreasedincreased 3%2% year-over-year primarily reflecting growth in average OEC on rent, partially resultingoffset fromby ongoing moderation in certain local markets where H&E's customer base washad heavilyhistorically been more concentrated.

Sales of rental equipment increased $33$4 million, or 31%,4%, during the firstsecond quarter of 2026 when compared to the firstsecond quarter of 2025 as we increased the volume of sales as we continue to improve the equipment mix and utilization. The margin on sales of rental equipment was 21%22% in 2026 compared to 28%19% in 2025. The decreaseincrease in margin on sale of rental equipment in 2026 wasprimarily duereflected toa favorable sales channel mix, as well as reduced volume of sales of H&E fleet and the associated impact from the fair value markup offollowing the acquisition fleet sold.acquisition.

Direct operating expenses in the firstsecond quarter of 2026 increased $126$112 million, or 39%,30%, when compared to the firstsecond quarter of 2025. Direct operating expenses were 46.2%45.8% of equipment rental revenue in 2026, compared to 44.2%43.6% in the prior-year period. The increase as a percent of rental revenue is primarily related to the impact of the H&E acquisition and related greenfields that take more time to mature. Specifically,In maintenanceaddition, certain operating expenses were elevated during the quarter, including increases in delivery and fuel expenses of $19 million and $18 million, respectively, due to increased volume of rentals and higher fuel prices throughout the quarter. Maintenance expense increased $23$13 million aswith an increased average fleet size has increased,and facilities expense increased $21$12 million as we have added more locations through acquisitions and opening greenfield locations, delivery and fuel expenses increased $13 million and $9 million, respectively, due to increased volume of rentals.locations.

Depreciation of rental equipment increased $70$47 million, or 41%,24%, during the firstsecond quarter of 2026 when compared to the firstsecond quarter of 2025 due to an increase in average fleet size primarily as a result of the H&E acquisition. Non-rental depreciation and amortization increased $40$30 million, or 121%,67%, primarily due to amortization of intangible assets related to the H&E acquisition and non-rental asset depreciation resulting from the growth of the business.

Interest expense, net increased $66$40 million, or 106%,47%, during the firstsecond quarter of 2026 when compared with the firstsecond quarter of 2025 due to the new debt issued to fund the H&E acquisition in June 2025.

Income tax provision was $1$5 million during the firstsecond quarter of 2026 compared to $10a benefit of $11 million in the same period of 2025. The effective tax rate in the current period was primarily driven by the level of pre-tax income (loss), certain non-deductible costs, tax creditscosts and foreign tax assessments.assessments, partially offset by tax credits.

Our primary uses of liquidity include the payment of operating expenses, purchases of rental equipment to be used in our operations, servicing of 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 MarchJune 31,30, 2026, we had approximately $8.0 billion of total nominal indebtedness outstanding.

Our liquidity as of MarchJune 31,30, 2026 consisted of cash and cash equivalents of $43 million and unused commitments of approximately $1.9$2.0 billion under our ABL Credit Facility. See "Borrowing Capacity and Availability" below for further discussion. Our practice is to maintain sufficient liquidity through cash from operations in combination with our ABL Credit Facility and AR Facility (together, the "Facilities") 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 Facilities or other financing arrangements will be sufficient to meet working capital requirements, anticipated capital expenditures, payment of dividends, and debt payments, if any, over the next twelve months.

During the threesix months ended MarchJune 31,30, 2026, we generated $106$179 million more cash from operating activities compared with the same period in 2025. The increase was primarily relateddriven toby increasedhigher revenues, the corresponding increase in collections on receivablesaccounts receivable and workingthe capitalsignificant duedecrease toin thecash paid for transaction costs year-over-year, partially offset by an increase in revenues.cash paid for interest and the timing of payment on accrued expenses.

Cash used in investing activities increaseddecreased $50$4.2 millionbillion during the threesix months ended MarchJune 31,30, 2026 when compared with the prior-year period primarily due to the acquisition of H&E in the prior year period. Our primary use of cash in investing activities is for the acquisition of rental equipment and non-rental capital expenditures. Generally, we rotate our equipment and manage our fleet of rental equipment in line with customer 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.

Financing cash flows decreased $30$4.3 millionbillion during the threesix months ended MarchJune 31,30, 2026 when compared with the prior-year period. Financing activities during the current-year period primarily represents our changes in debt, which includedreflected borrowings of $571$1,026 million on our revolving lines of credit and securitization which were used primarily to invest in rental equipment during the period. This wassecuritization, offset by repayments of $637$1,170 million funded through cash generated from operations and proceeds from the sales of used equipment. NetThe repaymentsprior-year inperiod included $3.5 billion of proceeds from the priorissuance yearof periodlong-term weredebt $41to million.fund the H&E acquisition, as well as net borrowings of $716 million under our revolving lines of credit and securitization.

Net capital expenditures for rental equipment increased $62$89 million during the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025. RentalThe increase primarily reflects higher investment in rental equipment expenditures and disposals have increased in the current year to shiftoptimize the mix of fleet,our drivefleet following the H&E acquisition and to support customer demand and generate revenue synergiessynergies, andpartially improveoffset utilization.by higher proceeds from the disposal of rental equipment.

As of MarchJune 31,30, 2026, the following was available to us (in millions):

As of MarchJune 31,30, 2026, $47$33 million of standby letters of credit were issued and outstanding, none of which have been drawn upon. The ABL Credit Facility had $203$217 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.

Under the terms of our ABL Credit Facility, our AR Facility, our Term Loan Facility and our 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. As of MarchJune 31,30, 2026, the appropriate levels of liquidity have been maintained, therefore this financial maintenance covenant is not applicable. Accordingly, we were in compliance with all applicable debt covenants as of June 30, 2026.

At MarchJune 31,30, 2026, Herc Holdings' balance sheet was substantially identical to that of Herc, with the exception of the debt held by Herc Holdings (Notes, Term Loan Facility and ABL Credit Facility) and certain components of shareholders equity. For the three and six months ended MarchJune 31,30, 2026 and 2025, the statements of operations of Herc Holdings and Herc were identical with the exception of interest expense on the debt held at Herc Holdings that is not reflected in the statement of operations of Herc.

On FebruaryMay 4,15, 2026, we declared a quarterly dividend of $0.70 per share to record holders as of FebruaryMay 18,29, 2026, with payment date of MarchJune 4,12, 2026. 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 MarchJune 31,30, 2026, there have been no material changes to our indemnification obligations as disclosed in Note 17, “Commitments and Contingencies” in our Annual Report on Form 10-K for the year ended December 31, 2025. For further information, see the discussion on indemnification obligations included in Note 12, "Commitments and Contingencies" in Part I, Item 1 "Financial Statements" of this Report.