03.11.2014

Upward trend continues at H&E

H&E Equipment Services, the USA based distribution and rental company has reported a sharp rise in third quarter profits.

Looking at the nine months to the end of September, revenues improved almost nine percent to $792.7 million, increases occurred in both rental and new equipment sales. meanwhile pre-tax profits jumped almost 30 percent to $64.7 million.

Moving on to the third quarter overall revenues were marginally higher, rising 1.7 percent to $275 million, with rental rising by more than 20 percent, while sales of both new and used equipment fell. Physical rental utilisation improved two percent over last year to 74 percent, while rental rates were up 2.9 percent on the year. The net result of this was to boost pre-tax profits by almost 48 percent to $27.1 million.

Chief executive John Engquist said: “The solid strength and momentum in our business continued in the third quarter and we believe further substantiates the recovery in the non-residential construction market. In the third quarter, we achieved a healthy 21% increase in rental revenues, maintained above industry average utilisation, and similar to last quarter, our combined parts and service business experienced double-digit growth. Although our new equipment sales were down year over year, we believe that this is primarily due to a challenging comparable quarter last year and demand for new equipment remains strong. We are pleased with the solid leverage in our business as EBITDA increased 18.8% on single-digit revenue growth, validating our strategy and evidencing our ability to capitalize on improving trends and opportunities in our end user markets.”

“Our outlook for the remainder of this year and into 2015 remains positive as we believe our company will continue to benefit from the anticipated growth in the commercial construction markets in the United States. The significant capital projects forecasted for our Gulf Coast region related to major chemical, energy and manufacturing are reported to be on track. We anticipate further fleet investment during the fourth quarter based on the current demand in our markets as well as in anticipation of these projects. Our company remains focused on executing our strategy and profitable growth.”

Vertikal Comment

Another strong set of numbers from H&E which is benefiting not only from an improved market, but also from its strong base in the gulf region where the oil and gas industry provides a solid base for the company’s operations.

The company also made substantial changes through the recession , having acquired JW Burris in 2007, and it is now really beginning to benefit from those changes. This year it looks set to become a billion dollar business for the first time.