26.02.2019

Strong growth for H&E

US based aerial lift, telehandler and crane distributor and rental company H&E Equipment Services has posted substantially higher profits and revenues for the full year and fourth quarter.

The company has posted full year revenues of $1.24 billion, an increase of more than 20 percent on 2017. All sectors of the business posted solid gains, while rental revenues improved almost 24 percent, partly due to the acquisitions of Contractors Equipment (CEC) in Colorado and Rental Inc in Florida. Pre-tax profits leapt 75 percent to $104.7 million. Thanks to the higher volumes, and strong revenue mix.

Fourth quarter revenues were 17.4 percent higher at $346 million, once again with improvements across all divisions, but especially rental revenues which increased 27.6 percent. Utilisation fell from 74.2 to 72.9 percent due mainly to the fact that the rental fleet was 26 percent larger than in the same quarter last year. While utilisation was lower rental rates improved two percent year on year. The average age of the rental fleet at the end of December was 34.5 months. Pre-tax profits were 26.1 percent higher at $34.8 million.

Chief executive Brad Barber said: “As a result of strong demand for rental equipment and new machinery combined with solid execution throughout our business, fourth quarter total revenues increased 17.4 percent, and adjusted EBITDA increased 26.2 percent from a year ago. Project activity in the non residential construction markets remained healthy and we continued to achieve rate improvement and high physical utilization levels, which drove a 27.6 percent increase in rental revenue from the prior year quarter. New equipment sales exceeded our expectations, increasing 7.1 percent from a year ago, the increase was largely due to higher aerial and crane sales, up 95.5 and 5.7 percent respectively.”

“Our outlook for 2019 is positive as industry rental revenues are forecast to increase, growth in the non residential construction markets is expected to continue and our larger contractor customers remain confident about the level of projects in their pipelines. Even with a fleet size that is 25.7 percent, or $361 million by original acquisition cost, larger than a year ago, physical utilisation is currently running above year ago levels. We remain focused on additional growth through acquisitions and warm starts, with two acquisitions in 2018 and our recent purchase of Texas-based We Rent It.”

Vertikal Comment

An excellent performance from H&A which appears to be going from strength to strength, adding very manageable bolt on acquisitions and opening new greenfield locations. It sounds as though this year has got off to a good start, so we would expect similar growth levels for 2019 with the possibility that revenues for the full year might just reach $1.5 billion.