06.11.2020

Better quarter for H&E

H&E Equipment Services has reported its third quarter results with a pick up in the quarter, while remaining below last year’s levels.

Total revenues for the nine months to the end of September were $853.5 million almost 15 percent lower than at this point in 2019. The reductions were similar for rental and sales, although used equipment revenues improved. The company reported a pre-tax loss of $18 million, compared to a profit of $65.3 million last year.

Looking at the third quarter revenues were 18 percent lower at $289.3 million, with similar reductions in rental and new equipment sales, while used equipment sales were higher. Pre tax profits were 56 percent lower than the same period last year at $17.1 million. Physical utilisation was 63.9 percent compared to 71.4 percent last year. Average rates were four percent lower, while the average age of the fleet was 40 months compared to 36.3 months at the start of the year, driven by a spend of just $101 million just a third of last year’s levels. Net debt was cut 17 percent to $968.4 million.

Chief executive Brad Barber said: “We are encouraged that demand in our end user rental markets accelerated during the third quarter. As a result of increased project activity and our focus on operating execution, physical utilisation was 63.8 percent for the third quarter.”

“While we are seeing meaningful improvements in our rental business, our financial results remain below year ago levels, our ongoing actions to reduce capital expenditures and operating costs resulted in significant free cash flow for the quarter. We have also continued to improve our leverage and liquidity.”

“The current environment could further increase the secular shift toward renting equipment versus owning, creating greater opportunities for us to increase market share. Based on our improving visibility, we plan to accelerate our growth strategy. This includes significantly increasing the number of warm starts next year. We remain focused on pursuing acquisition opportunities in both the general rental and specialty rental businesses.”

Vertikal Comment

The quarterly result was not at all bad with rental only around 18 percent below this time last year and signs are that things were picking up, how the increased number of Covid-19 cases and further restrictions will impact the fourth quarter is hard to say. It is in a good place however to move on any acquisition opportunities that arise as the year nears.