30.10.2018

Strong quarter for H&E

US based crane, aerial lift and telehandler sales and rental company H&E Equipment Services has reported a strong third quarter in terms of revenues and profits.

Starting with the nine months to the end of September, revenues were more than 21 percent up on the same period last year at $893 million. While pre-tax profits more than doubled to $69.9 million. Partly due to merger costs associated with the aborted NEFF acquisition, but mostly due to charges for the early retirement of some of its long term debt.

Moving on to the third quarter revenues were 24.3 percent higher, at $322.1 million with increases in all areas – rental, used equipment and new equipment sales. Rental rates improved 2.2 percent, while utilisation fell from 73.3 percent to 71 percent for a fleet which was 25 percent larger, partly due to several acquisitions early this year in Colorado, Florida and Alabama.

The average age of the rental fleet at the end of September was 33.8 months. Pre-tax profits for the quarter almost quadrupled to $28.97 million, again thanks to the comparison to a quarter last year which bore most of the charges mentioned above.

Chief executive John Engquist said: “Our business performed well during the third quarter as we took advantage of the strength in the non residential construction markets. Ongoing rental rate improvement as well as solid broad based demand throughout our geographic footprint drove a 24.2 percent increase in rental revenues. Despite organically growing our fleet by $236.6 million year to date, physical utilisation remained strong and we achieved our expected year over year and sequential rental rate increases. Now that this significant fleet investment has been absorbed into the business, our utilisation has returned to industry leading levels during the fourth quarter. A year ago, our utilisation was at unsustainable levels and resulted in missed opportunities in our end markets. We believe our fleet investment has positioned us well for the rest of this year and for 2019.”

“The momentum in our distribution business continued during the quarter with new equipment sales increasing 39.4 percent, largely due to an increase in new crane sales of 51.2 percent from a year ago. Demand for new earthmoving equipment was also solid, increasing 39.3 percent. Overall, it was a good quarter for our business.”

“As we move into the fourth quarter, project activity remains strong resulting in healthy demand for rental equipment and is consistent with the ongoing strength in the non-residential construction markets, which is forecast to continue into 2019. Lastly, our stated growth strategy including both acquisitions and organic expansion remains on track.”

Vertikal Comment

An excellent quarter from H&E which looks to be gaining real momentum as it integrates its latest acquisitions, and benefits from a recovery in equipment sales and rental demand.

It would not surprise us to see the company make a few more bolt on acquisitions as we go into the new year as it spreads its geographic coverage over a wider area.

A very positive and encouraging set of numbers