27.02.2015

Record year for H&E Equipment

US based sales and rental company H&E Equipment has reported revenues for 2014 up over 10 percent to $1.09 billion, while pre-tax profits rose over 42 percent to $92.7 million.

Rental revenues for the period increased almost 20 percent to $404 million, with strong growth in new equipment sales and product support, offset by lower used equipment revenues. Rental fleet utilisation increased from 71.9 to 72.4 percent, while rental rates improved three percent. Aerial lifts represent over 62 percent of the fleet, with 17,378 units at the end of the year, with an average age of 36.1 months. The rental fleet as a whole was 31.7 percent.

Revenues in the fourth quarter increased 14.7 percent to $297.8 million, with rental rising over 22 percent to 110.8 million. Pre-tax profit was $28 million.

Chief executive John Engquist said: “The fourth quarter represented a strong conclusion to a banner year for our company as we continued to successfully capitalise on the accelerating recovery in commercial construction markets. Our rental business is performing extremely well, with revenues increasing 22.6 percent in the fourth quarter compared to last year, as we continue to experience solid demand in all of our end user markets. As a whole, 2014 was a strong year for our business as total revenues and EBITDA increased 10.4 percent and 22.0 percent, respectively, as compared to last year. Our solid growth for the year was driven by a 19.2 percent year-over-year increase in rental revenue combined with average time utilisation of 72.2 percent and our ability to achieve continued rate increases.”

“We believe healthy growth opportunities will continue into 2015, driven by momentum in the non-residential construction markets and increasing industrial expansion in Louisiana and Texas. While there is concern that reduced oil prices may negatively impact the anticipated expansion in Louisiana and Texas, many projects are expected to continue as a result of low natural gas prices. In addition, oil and gas activities only accounted for approximately 13 percent of our total revenues in 2014, with the vast majority of our equipment being used in oil production rather than exploration, which historically has been less sensitive to changes in the price of oil”.

“Finally, we believe any adverse impact from decreased oil patch activity may be mitigated by increased activity in other industries as a result of lower fuel prices. We believe our outlook is positive based on the current trends we see in our business, recent discussions with our customers and the solid outlook for the construction markets.”

Vertikal Comment

Another solid result from H&E, which continues to expand its rental business while maintaining solid new equipment sales. The company has good national coverage, with plenty of cope to continue to grow, and expand. The company has some significant exposure to the struggling oil&gas industry, but claims that it mostly works with oil and gas production, rather than exploration which is being cut back substantially.

In spite of the challenges facing this part of the business, we expect H&E to continue its overall growth during 2015, albeit at a slightly slower pace.