22.02.2021

Pick up for H&E

US sales and rental company H&E Equipment Services has released its fourth quarter results which show a solid pick up in revenues.

Total revenues for the 12 months to the end of December were 13 percent lower than in 2019 at $1.17 billion, with a drop off in all areas except sales of used equipment. The company posted a pre-tax loss of $41.4 million for the year, although it would have made a small profit if it had not been for non-cash write downs and a charge for shifting to longer term, lower cost loans.

In the fourth quarter, revenues came in just 9.3 percent below the same quarter in 2019 at $315.6 million with a pre-tax loss of $14.6 million, but this after a $44.6 million cost for early extinguishment of debt, and a $12.2 million non-cash goodwill impairment. Rental rates were down 4.5 percent on the year, while physical utilisation came in at 65.4 percent compared to 69 percent a year earlier. Capital expenditure for the year was $138.8 million, while the sale of machines from the fleet totalled $142 million, leaving a negative net investment. The average age of the fleet at the end of December was 40.9 months – compared to 36.3 months a year ago. The aerial lift fleet had an average age of 48.9 months, while the crane fleet was 53.9 months.

Chief executive Brad Barber said: “Our fourth quarter performance reaffirmed our beliefs regarding the ongoing improvement in our business. Demand in our end user rental markets remained good and physical utilisation increased sequentially from the third quarter. Our distribution business also delivered better than expected results. We are encouraged with the current trends and visibility as we move into 2021.”

“With our successful upsized notes offering during the fourth quarter, our balance sheet is strong and will certainly support the acceleration of the growth initiatives we outlined last quarter. From an organic perspective, we are significantly increasing the number of warm starts across our footprint to improve our density in high-growth regions. Additional growth is expected from tuck-in acquisitions of general rental businesses. We are also focused on entering the specialty rental business with opportunities that would be synergistic with our current lines of business and fleet mix. Throughout our 60 years in business, we have always been about equipment solutions, strategically growing our product lines and the ability to serve an increasing base of customers. We are ramping up this commitment in 2021.”

Vertikal Comment

This is another encouraging set of numbers from H&E although the average age of the aerial lift rental fleet is growing and will create issues going forward unless the company begins to resolve this issue during the year, before it becomes a problem.

The company has raised new money and seems to be on the look out for new ‘bolt on’ acquisitions, if its ready to move quickly there could be a good few interesting targets over the next six months.