管理層發言
Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Herc Holdings, Inc. Second Quarter 2026 Earnings Call and Webcast. I would now like to turn the call over to Leslie Hunziker, Head of Investor Relations. Please go ahead.
Thank you, operator, and good morning, everyone. Today, we're reviewing our second quarter 2026 results with comments on operations and our financials, including our view of the industry and our strategic outlook. The prepared remarks will be followed by Q&A. Let me remind you that today's call will include forward-looking statements. These statements are based on the environment as we see it today and are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the press release, our Form 10-Q and our most recent annual report on Form 10-K, as well as other filings with the SEC. In addition, we'll be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliations to these non-GAAP measures to the closest GAAP equivalent can be found in the conference call material. Finally, please mark your calendars to join our third quarter management meetings at Morgan Stanley's 14th Annual Laguna Conference in California on September 16. This morning, I'm joined by Larry Silber, Chief Executive Officer; Aaron Birnbaum, President; and Mark Humphrey, Senior Vice President and Chief Financial Officer. I'll now turn the call over to Larry.
Thank you, Leslie, and good morning, everyone. With the H&E integration successfully completed in the first quarter, our entire focus in the second quarter shifted to execution. As we've discussed, the first half of 2026 was about converting our larger optimized platform into stronger utilization and revenue growth as we move through the seasonal ramp. I'm incredibly proud of how Team Herc is performing. In the second quarter, we reached an important post-acquisition turning point as pro forma equipment rental revenue returned to growth, increasing 2% overall. Importantly, that return to growth happened earlier than we expected within the quarter, which gives us momentum and confidence heading into the second half. Alongside revenue growth, disciplined fleet management drove positive fleet efficiency as we continue to align the combined fleet. We are also progressively capturing more of the value of this acquisition as revenue cross-selling synergies build and cost synergies track to plan. That operating momentum, combined with accelerating customer demand gives us confidence to raise our full year guidance today. Of course, the quarter was not without its challenges. Fuel inflation was a macroeconomic headwind that pressured margins, most notably in April, though margins improved as volume built through the quarter. Mark will take you through those details. Turning to Slide 5. We continue to follow our playbook, executing against our long-term growth strategies. First, we are growing the core. Today, our top line growth continues to be led by national accounts fueled by robust mega project activity. The H&E acquisition was well timed, adding scale, fleet capacity, talent and branch density to expand our role on large complex projects and capture a greater share of this increasing demand. Second, we're expanding specialty. Specialty revenues were up double digits in the quarter, and we continue to disproportionately invest in specialty fleet to support mega projects, our new specialty branches and the cross-selling opportunities across our combined customer base. Third, we're elevating technology. As an industry leader, our digital capabilities remain a true differentiator. We continue to invest heavily in our proprietary ProControl platform, utilizing AI and advanced telematics to give customers the insights they need to track, measure and manage their fleet for a safer, more efficient job site. Engagement is building quickly. Active external users on ProControl grew nearly 20% quarter-to-quarter as more of our combined customer base puts these tools to work. At the same time, our e-commerce channels provide 24/7 flexibility for customers who know exactly what they need. The platform is a seamless way to transact and secure equipment on their schedule, always backed by the expert support of our sales and branch team. That convenience is clearly resonating as Q2 was our highest revenue-generating e-commerce quarter-to-date. Finally, we're investing responsibly in fleet to support highly visible customer demand while maintaining capital discipline and managing our balance sheet for the long-term. Now moving to Slide 6. Our ability to execute at this level is a direct result of our people and our culture. Integrating a large complex acquisition while simultaneously pivoting back to growth in an uneven demand environment requires an exceptional organization. We have built a culture grounded in collaboration, standardized processes, comprehensive training and industry-leading technology to execute consistently across our expanded network. The absolute foundation of that culture is safety. It is the non-negotiable starting point of everything we do. By equipping our teams with the right training and safe, well-maintained gear, we ensure they can perform at their best, while delivering the superior, reliable service our customers expect. Team Herc's dedication to operating safely and efficiently is what makes our growth possible. Now, before we discuss the financial outlook, let me turn it over to Aaron to talk about our operational performance and initiatives. Aaron?
Thanks, and good morning, everyone. I fully agree with Larry's comments on the strength of our culture. It was the dedication, discipline and collaboration of our team that allowed us to integrate the H&E acquisition so efficiently. Now, with that heavy lifting behind us, we have fully pivoted to execution. Our sales force is aligned and fully engaged, and our operating model is standardized across the network. Today, we are actively leveraging our expanded geographic footprint and beginning to capture the efficiencies of scale and the synergy opportunities that made this combination so compelling. Turning to Slide 8. Optimizing our fleet was a critical integration initiative, getting the right equipment into the right markets with the right mix, but optimization isn't a one-time event. It requires continuous active management to stay ahead of evolving demand trends. This is where Herc excels. We are experienced, disciplined fleet managers and as showed in the quarter we brought the combined company back to positive fleet efficiency where revenue growth outpaces fleet growth. By keeping our focus squarely on improving utilization, we generated 2% higher pro forma equipment rental revenue on approximately 3% less average fleet at OEC compared to last year. That improved efficiency is exactly what positions us to grow. With the fleet now tightly aligned to demand and utilization moving higher, we have the operating discipline in place to invest in the accelerating opportunity we are seeing. As seasonal volume ramped up in the quarter, we onboarded roughly $450 million of our 2026 fleet buy. Through the first half of the year, we added $634 million of fleet at original equipment cost. A portion of that spend supports the revenue synergy target we set for this year, while another portion supports the planned mega project growth embedded in our original fleet plan. Today, however, our pipeline and on-rent activity on large multiyear projects are tracking ahead of our assumptions. External data also continues to point to increased mega project starts this year. So we are stepping up fleet investment where we have high conviction in the rising demand and where our larger scale is enabling us to expand our role with major contractors and grow share of wallet. Mark will walk you through the revised capital investment plan in just a minute. But even as we increase fleet investment, we remain highly disciplined with life cycle management. In the quarter, we disposed of $247 million of fleet at OEC, generating healthy proceeds of approximately 46%. You'll see that our full year disposal step up from our original plan. That's intentional. As demand acceleration is coming from mega projects in specialty, we are fine-tuning the fleet mix for today's environment. Recycling that capital at healthy recovery rates helps fund the higher demand fleet and keeps us capital efficient. On Slide 9, despite the stronger rental activity we're seeing, the overall demand environment remains bifurcated. Local market activity is stable in general, though the dynamics vary. While some markets are feeling the brunt of the weakness in the interest rate sensitive commercial sector, others are experiencing growth driven by infrastructure, education, health care and MRO. Certain local markets are also benefiting from the secondary demand generated by nearby mega projects. That said, national accounts are where we continue to see the strongest growth, driven by increasing activity across energy, data center and manufacturing projects. The H&E acquisition significantly increased our bandwidth to serve this national market. Legacy Herc was already a strong mega project participant. What's changed is our ability to take on more of these opportunities and expand our role with major contractors because we now have more fleet capacity, more branch density and a larger operating platform. As such, we have increased our target share of the total U.S. mega project opportunity from 15% to 20%. In today's uneven environment, diversification across geographies, project types and customer accounts is what drives our resiliency and gives us a distinct competitive advantage. You can see the breadth of that diversification on Slide 10. This is where our diversification becomes more tangible. We serve contractors, industrial accounts, infrastructure and government agencies, commercial facilities and event-driven customers, and each of those groups has different demand trends, project requirements and service expectations. That's why sector expertise matters. Our sales teams understand the language of their customers, the nuances of their projects and the equipment and service requirements that matter most in each vertical. So whether it's a data center or a health care project, a utility job or a pharmaceutical manufacturing plant, we can bring the right solution to the table. Now with the larger platform, broader fleet availability and leading-edge technology tools, we can support those customers in more ways. That's what helps us deepen relationships and create stickier, higher-value opportunities over time. Those opportunities aren't just broad, they're deep, and they keep growing. Turning to Slide 11. The external data continues to back up what we're seeing in the field with Dodge projecting over $800 billion of U.S. mega project starts in 2026, all above the level we saw in 2025. We know investors are trying to translate these massive headline numbers into actual rental revenue. So let me frame how we think about it. First, that Dodge number reflects total construction value; non-equipment rental spend historically, about 2% converts into rental, so that varies by project type. Second is our target share. As I said, over time, we are now targeting 20% share of that mega project rental opportunity. Third, these are multiyear jobs, so the revenue doesn't hit all at once. It's spread over the duration of the project, which is typically 3 to 5 years or more. The math is more nuanced than the headline suggests. But the takeaway is simple: the market opportunity is large, it is durable, and we now have the capacity to capture a meaningfully larger piece of it as these projects ramp and new projects enter the pipeline. Turning to Slide 12. This is the framework we introduced at the beginning of the year to illustrate our 2026 operational progression. The key message is that the playbook is working. The integration actions are behind us. The foundation is in place, and we are now moving into the acceleration phase with a 30% larger, more efficient business, a highly productive fleet, new specialty locations gaining momentum and a larger sales force maturing across the network. As we execute this playbook, two factors have shifted since we set our original plan. The first is the strengthening mega project demand we just discussed. The opportunity is larger than we expected earlier in the year; we are increasing fleet investment to support that growth based on the robust project pipeline in front of us. We are adjusting our equipment rental revenue guidance accordingly. The second variable is fuel and logistics inflation, which inflected significantly higher beginning in April as a result of the conflict in the Middle East. Larry touched on this earlier, and Mark will take you through the specifics. But let me give you some operational insight into how we're thinking about logistics longer term and the opportunity it presents because fuel and logistics inflation isn't only a cost recovery issue. With a much larger network in place, we have an opportunity to improve the way we manage transportation economics across the platform. That work is underway through a comprehensive logistics transformation initiative that began in late 2025. It builds on the progress we've made over the last several years, but is designed for the scale of the company we are today. The focus is on better routing, stronger process discipline, improved cost recovery and more consistent execution across the network. This is a multiyear effort, and it is above and beyond our acquisition cost synergies. Over time, we expect it to help us build a more efficient, scalable delivery engine that improves service for customers and supports ongoing margin improvement. As we move into the second half, the operating agenda is clear with the right fleet against accelerating demand, continue improving utilization and fleet efficiency and take the next step in scaling our cost structure for the long-term. The team is aligned. The opportunity is strong, and we are focused on converting this larger platform into sustainable growth. Mark will now walk you through the financial results and the updated outlook. Mark?
Thanks, Aaron, and good morning, everyone. I'm on Slide 14 with a summary of our key financial metrics. Starting with our GAAP results. Equipment rental revenue was up approximately 23% year-over-year, and total revenues grew 20%, primarily driven by the acquisition of H&E which was in our base for only one month in the prior year period. Adjusted EBITDA increased 19%, and adjusted EBITDA margin was 40.4%. REBITDA, which excludes equipment and parts sales, increased approximately 18% and REBITDA margin was 41.4%. Margin pressure was driven by the impact of the H&E acquisition and fuel and freight inflation year-over-year. Adjusted net income was $48 million or $1.43 per diluted share, including add-back adjustments of $4 million of restructuring and transformation costs. That includes initial cost of the logistics transformation initiative Aaron just discussed. Because the prior year GAAP comparison includes only one month of H&E, Slide 15 provides a more meaningful view of the combined company's underlying performance in the second quarter. On a pro forma basis, with Herc and H&E combined in both periods, equipment rental revenue increased despite the year-over-year reduction in average fleet at OEC, resulting in strong fleet efficiency in the second quarter. Pro forma dollar utilization increased more than 200 basis points over last year, another clear indication that the combined fleet and the rental revenue mix are becoming more productive. On profitability, pro forma adjusted EBITDA margin was down approximately 60 basis points and pro forma REBITDA margin was down about 120 basis points. As noted, the largest source of the year-over-year cost pressure in the second quarter came from fuel and transportation inflation, which is up approximately 35% since the first quarter. This impacted adjusted EBITDA margin by about 150 basis points and adjusted REBITDA margin by 170 basis points. For context, not all fuel exposure can be recovered in real time. A portion of our fuel consumption comes from our own sales and service vehicles as well as typical intra-region fleet positioning where there is no direct customer offset. On the delivery and refueling side, which is embedded in ancillary revenue, recovery depends on customer arrangements and contract terms and the timing of that recovery can lag sudden price moves like we saw in April. So we're working on all of this through our own pricing actions, better pass-through discipline and contract renewal negotiations. Those fuel and transportation pressures were partially offset by improved operating performance and cost synergies such that when you exclude fuel inflation, adjusted EBITDA margin was up 90 basis points and adjusted REBITDA margin was up 50 basis points year-over-year. Turning to Slide 16. You can see that we generated $202 million of free cash flow for the first half. We ended the quarter with ample liquidity of $2.1 billion and net leverage of 3.95x, and we paid our regular quarterly dividend of $0.70 per share. When it comes to capital allocation, as Aaron said, we're making a deliberate choice this year to step up fleet investment to meet increasing demand. Importantly, that incremental investment is weighted toward higher margin, higher return specialty equipment. As this fleet goes on rent against strong demand, it drives EBITDA growth. Growing EBITDA is the most powerful lever for bringing down leverage. We like the flywheel setup we're beginning to see as we think about the trajectory into 2027. That brings me to guidance on Slide 17, which we are increasing to reflect stronger demand, particularly in national accounts. You can see the full ranges here. At the midpoint of the updated guidance, we now expect full year equipment rental revenue of $4.425 billion, supported by roughly $900 million of net fleet CapEx. On a pro forma basis, the revised midpoint estimate reflects equipment rental revenue growth of nearly 5% on flat average OEC year-over-year. Adjusted EBITDA is now projected to be approximately $2.09 billion at the midpoint of the range. A few key assumptions behind the updated outlook. Our incremental revenue synergy target for the year is unchanged at $100 million to $120 million. We feel really good about the progress we're making there, and cost synergies also remain on track with an incremental $90 million this year towards the fully realized $125 million target by year-end. That said, oil prices have moved higher again since June. So our guide assumes fuel and freight will remain cost headwinds in the second half. Given the uncertainty around how long that macro volatility persists, we're modeling a quarterly expense impact broadly consistent with the second quarter. All in, we expect fuel and transportation inflation to create about a point of pressure year-over-year on adjusted EBITDA margin for full year 2026. Finally, as a result of the higher fleet investment, free cash flow is now expected to be between $250 million to $350 million this year. The bottom line: the revenue inflection we expected is now underway. Demand is stronger than our original plan, and we are investing to capture that opportunity while continuing to manage fleet efficiency, costs and capital with discipline. Now let's open it up for questions. Operator?
分析師問答
Your first question comes from the line of Jerry Revich with Wells Fargo.
I just wanted to ask — really nice to see the dollar utilization accelerate over the course of the quarter. We're hearing about price increases up to one point per month in some regions. Just talk about the pricing environment that you're seeing. Is that consistent with the cadence that you've seen over the course of the quarter and into July?
Yes. From our perspective, the dollar utilization was, quite honestly, a lot of self-help. We saw and anticipated the fleet to get healthier as we worked our way and inflected through Q2. That happened probably a little bit ahead of where we thought it would and that's probably the biggest driver in the lift from a dollar utilization perspective. On the pricing environment, at the end of the day, we have a rational and constructive pricing environment; the supply and demand dynamics are extremely healthy. It's a huge focus for us, and we're going to continue to push price like we always do.
Okay. Super. And then on the time utilization part of the equation, when we look at the strong results you folks were posting as a stand-alone company before H&E — dollar utilization in the mid-40s. How much progress can we make on closing that dollar utilization gap based on what you see in front of you compared to what Herc posted on a stand-alone basis, call it, four years ago?
It's a great question. You have to think about that in context of averages. Herc was probably running in the low 40s previously. As we sit here today, there's still a mixed component that we have to continue to invest in to bring that overall mix back up to where Herc was on a stand-alone basis pre-acquisition. As you think about the incrementals from a dollar utilization perspective, you can anticipate probably seeing the kind of lift we saw from Q1 to Q2 continue into Q3 and Q4 year-over-year for dollar utilization.
Your next question comes from the line of Robert Wertheimer with Melius Research.
I know you just touched on it with Jerry and previously, but what do you see as your biggest margin opportunities going forward? Are there still inefficiencies? There's still a lot of sales force ramp as you try to get people to sell the broader range of what you guys do. Just curious what gets you back there. And on mega projects, does this put you in a position of wanting to bid for more first position in mega projects? Maybe you could just talk about that opportunity widening out. Is that just more support? Is that a change in how you approach go-to-market?
On the margin question, it's about moving our mix profile back to where we were with specialty. We have a longer-term goal of taking our specialties to a 20% to 30% range of our business. After the H&E acquisition, we fell to the mid-teens. So moving that back up really helps our margin profile. There's a lot of self-help we can do, such as the logistics work we've embarked on, which will be a multiyear program. The sales teams are large, but they're still learning how to work together from the acquisition. As that matures and the tools are used properly — tools like pricing discipline — those will help our discipline. On the mega piece, when we look back two years ago to now, yes, we are more equipped to be the primary or a strong secondary on more mega projects than we were two or three years ago. Our scale matters a lot. The large contractors take note because we have more fleet, more scale, more capabilities and better technology than we had a few years ago. Those are positioning us to win more.
Your next question comes from the line of Mircea Dobre with Robert W. Baird & Co.
Just going back to the CapEx guidance increase. I think I heard two things going on, and I'm trying to parse out which is the bigger driver here. On the one side, you're talking about better demand in mega projects being at the root of that. You're also talking about leaning into specialty more. So I'm trying to understand if this CapEx increase is a function of you truly ramping up the specialty business, maybe taking advantage of that H&E footprint, or if this is more truly a demand signal and presumably, this tells us something about 2027, given the timing of your CapEx increase. So help us parse this out.
I would say the increased fleet is demand driven. That demand is coming from both mega projects and specialty, and oftentimes, those are going hand in hand. When you think about this as we move into the back half of the year, the midpoint of the new guide grows fleet about 300 basis points in the second half and levels year-over-year from an average fleet perspective. This increased CapEx is absolutely not speculative. This is demand-driven and not a Phase 2 of branch optimization. We're putting additional fleet into locations where demand is the driver.
Okay. That's helpful. My follow-up on the H&E integration, which you said that you're pretty much done with. My impression of their business prior to you acquiring it is that pricing was a little different relative to what we would consider best-in-class in the industry and maybe some of the things you were doing. So I'm curious where you are in terms of reassessing pricing for that part of the business, maybe some of the contracts that are a little more long term in nature that H&E had.
You have to bifurcate that between the local market spot and the contracts. We're probably where we thought we'd be. The contract component will probably take about a three-year run to raise the ultimate contract pricing to where we anticipated pre-acquisition. The spot market component will run as the local market runs. H&E is inside our technology and pricing tools now, so we're beginning to see benefits today. The real pricing lift comes from the local market being reignited.
Your next question comes from the line of Kyle Menges with Citigroup.
I was hoping if you could unpack a little bit what's going on in the fuel and transportation cost inflation. Can you break it down between what's stickier versus more transitory, what is tied to your sales and service vehicles versus timing of getting better recoveries, et cetera?
If you think about roughly 170 basis points of impact, I'd call it all transitory as we sit here today. That's measured off Q1. We saw about a 35% increase as we worked through Q2. Simplistically, probably half of that impact cannot be passed on — inter-branch moves and servicing our own sales and service vehicles account for about half the impact. The other half are items that have the ability to be passed on to customers. We're working to be as tight as we can on recovery as we move into Q3. The wildcard is whether 35% becomes 50%. We built in about the same level of impact in Q3 and Q4 and we'll see how it plays out.
Got it. That's helpful. And then just curious, any update on the roughly 50 specialty locations that you opened in the fourth quarter and first quarter and how those are progressing in the ramp and the cross-selling as well?
Those locations are performing well. We scaled our specialty business rapidly by leveraging real estate from the acquisition; it would have taken several years without that. It'll take two years for those locations' EBITDA margins to mature to the level of our mature locations, but they're contributing EBITDA now. They're all managed by internal managers who came up through our organization. There's a lot of career movement with all those branch optimization openings. Our regional management has done a great job putting people in positions to win, and our team is working well on share and fleet.
Your next question comes from the line of Kenneth Newman with KeyBanc Capital Markets.
Maybe first, Mark, just on the synergy capture target. Of the incremental $90 million in cost synergies and the incremental $100 million to $120 million of revenue synergies, how much of that is left to be realized in the back half of this year? Help us frame the momentum into the third and fourth quarter.
From a revenue perspective, it was always weighted to the back half, probably about 60% back-half weighted. From a cost perspective, the incremental $90 million started a little slower but the ramp now is ratable from July through December. I'd estimate roughly 55% of that incremental $90 million is expected in the back half.
Okay. Got it. And then on the fleet and CapEx needs, do you think the OEMs have capacity to support further fleet expansion if the market supports it? How do you think about the incremental return on the next piece of equipment being bought, given last year's advanced purchase agreements?
We are very confident in the OEMs' ability to supply us with equipment in the back half of the year to the incremental level. The majority, probably 70%, of the incremental units are specialty equipment that we'll be bringing in. We expect that to contribute to financial performance and dollar utilization because most of that will go right to a job. It will also set up a strong flywheel going into 2027.
Your next question comes from the line of Tami Zakaria with JPMorgan.
My question is more medium-term. Given your free cash flow expectation has come in a bit lower now, how do you think about your potential to deleverage the balance sheet over the next 12 to 24 months if you have to continue investing in CapEx in response to improving demand?
Great question. For 2026, this has very little impact to our leverage expectation. There's a flywheel effect into 2027; we could be looking at 2.5% to 3% fleet growth into 2027, generating EBITDA, and that EBITDA generation is the most efficient way to reduce leverage. I don't see this as problematic in getting to about 3x net leverage by the end of 2027. We're going after demand; this is not speculative and should be EBITDA generating, which helps bring leverage down.
Understood. That's helpful. My second question is on fuel inflation. You mentioned the 150 basis points fuel headwind in the second quarter. Do you have any expectation of what that headwind might look like in Q3 and Q4 in terms of basis points?
We're anticipating the same level of impact in Q3 and Q4 that we saw in Q2. Because Q3 and Q4 are higher revenue quarters, the percentage impact will be slightly lower, but for the full year we're modeling about a one-point drag on adjusted EBITDA margin.
Your next question comes from the line of Neil Tyler with Rothschild & Co Redburn.
Going back to the changed goal for mega project participation: how does that impact your longer-term strategy in terms of customer mix? Are there any verticals you might need to add to accommodate that change in go-to-market strategy? And on the longer-term logistics efficiency program, can you help us understand the upfront investment cost, when that balances with efficiencies, and roughly where you expect to be when that happens?
On customer mix, we believe a 60% local / 40% national mix is the right long-term balance. In the current environment, local markets are pressured by interest rates, so it's harder to achieve that mix right now. Our fleet is fungible, so we can move it from local markets to serve mega projects. But long-term, 60/40 remains the target and is the optimal way to manage the business. We continue to focus on local markets because cycles turn and we want to be ready. On logistics, we started focusing on logistics internally about three and a half to four years ago and built a logistics team. With the acquisition, we gained scale and saw opportunity to do much better. Logistics is complex and it's a significant cost burden on the business. We're expanding our team and engaged a large consulting firm for expertise. That engagement started in January and we're rolling out pilots. This is a multiyear project; as we get traction we'll share more, but our goal is to become experts at logistics as well as rental and solutions.
Your next question comes from the line of Steven Ramsey with Thompson Research Group.
On national accounts and the 20% share target for mega projects, is that something you expect to achieve in the second half of 2026, or is this a 2027 target?
If you look back over the last few years, we targeted 10% to 15% share previously. The acquisition positioned us better and we started to touch the 15% level. With our pipeline, contract commitments and CapEx this year, we see our position strengthening to the 15% to 20% range over the next few years. It doesn't mean we'll hit 20% in 2026 or 2027, but we see our position moving toward that range.
Okay. That's helpful. And then thinking about raising CapEx and better market demand, did you feel like you were missing opportunities in the marketplace and now with the larger fleet you can capture that? Or is it simply that the demand is out there and you can go get it now?
It's about Herc's positioning in the mega project arena and our capabilities. We're a much different looking company than we were 15 months ago, and that's our view on where we're going.
Your next question comes from the line of Seth Weber with BNP Paribas.
H&E historically had a strong footprint in petrochemical-type projects. Are you seeing any pickup in that part of the business specifically?
They had a good footprint in the Gulf and in West Texas — the Permian — as did Herc. Herc had upstream, H&E had upstream, Herc had downstream and H&E didn't have downstream. Our position remains in the mid-single digits to high-single digits range. When oil shoots up, downstream turnaround activity can slow because producers want to maximize production; it's ebb and flow. So no material change to our oil and gas business; it's still in the mid- to high-single-digit level.
Okay. And can you help with the CapEx cadence for the second half? It seems Q3 could be unusually large year-over-year. Is that the right way to think about it — heavily Q2/Q3 weighted with Q4 more normal?
Think about the new midpoint of $1.325 billion and that about 70% to 75% of that being acquired in Q2 and Q3. That's the right way to think about it. Q1 and Q4 should look more normal, with the heavy activity in Q2 and Q3.
I will now turn the call back over to Leslie Hunziker for closing remarks.
Thank you for joining us on the call today. We certainly look forward to updating you on our progress in the quarters to come. Of course, if you have any further questions, please don't hesitate to reach out to us. Have a great day.
Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.