30.07.2018

Profit surge at H&E

H&E Equipment has reported a very strong first half in terms of both revenues and profits.

In the first six months the company achieved revenues almost 20 percent higher at $570.8 million, led by strong improvements in both rental and new equipment sales. The numbers also include the acquisitions of Contractors Equipment Center in Denver from the start of January, and Florida based Rental Inc from April. These added eight new locations, while H&E also opened one greenfield site in Aledo, Texas, increasing its branch network to 89 locations. Pre-tax profits for the first half jumped 69 percent to $40.9 million.

In the second quarter revenues were almost 25 percent higher and included $9.8 million from Contractors Equipment Center and $7.6 million from Florida based Rental Inc, with the balance of $43.7 million coming from organic growth, more than half of which was due to a surge in new equipment sales. Pre-tax profits for the quarter with 78 percent higher at $27.9 million.

Physical utilisation in the quarter slipped slightly, from 72.2 to 72 percent, but this was for a significantly larger fleet. Average rental rates increased 2.4 percent, while the average age of the rental fleet as of the end of June was 34.2 months.

Chief executive John Engquist said: “Our second quarter performance was strong as both our rental and distribution businesses achieved significant growth from a year ago. Rental revenues increased 21.5 percent, resulting primarily from high utilisation on a significantly larger fleet, combined with solid increases in rates. New equipment sales increased 50.1 percent and were primarily driven by new crane and earthmoving sales. We are pleased with the growth opportunities in the industry as well as our efforts to capitalise on these opportunities.”

“Our outlook for the balance of this year remains positive as demand in our end user markets is strong and many industry indicators forecast continued growth in non-residential construction. Increasing the size and scale of our business is a strategic priority, which we expect to achieve through organic growth, acquisitions and Greenfield and warm start branch expansion.”

Vertikal Comment

Another strong quarter from H&E which might well be congratulating itself on losing the Neff acquisition to United – for which it was compensated. On the surface the smaller acquisitions look to be more profitable, as well as being much easier to integrate and absorb.

A very positive set of numbers which put the company on target to achieve a $1.25 billion year in 2018, with an even steeper rise in profits.