Strong quarter for H&E

US based sales and rental company H&E Equipment Services has reported a strong fourth quarter and first half for both sales and profit.

Total revenues for the six months were $594.2 million, an increase of more than five percent on the same period last year, with increases in all areas. Pre-tax profit for the period was $27.4 million, compared to a loss of $39.7 million last year.

Looking at the second quarter, sales were $315.8 million, up 13.4 percent on the same quarter last year. This was thanks to higher sales, but also an improvement in physical utilisation from 59.5 to 68.3 percent, while rental rates improved by one percent compared to the first quarter. Pre-tax profit for the quarter was $21.7 million, an increase of 80 percent on the same period last year.

Capital expenditure on the fleet over the first half was $246 million, compared to $73.9 million last year. The company also sold older equipment from the fleet for a total of $75.3 million. The average age of the fleet at the end of June was 39.7 months, marginally lower than last year. The aerial lift fleet however is 49.4, up from 46 months last year, while the crane fleet was 51.8 months, down from 57.9 percent last year. Total debt remained roughly the same as $1.25 billion.

Chief executive Brad Barber, said: “Physical utilisation increased to 68.3 percent at a time when we grew our fleet by more than five percent. The rising demand from customers led to a one percent improvement in second quarter rental rates compared to the preceding quarter, representing the first sequential quarterly improvement since late-2019. With improving utilization, rising rental rates and fleet growth, we are increasingly encouraged by the prospects for our industry as we enter the second half of 2021.”

“Customer inquiries addressing current equipment needs remain strong and we expect the elevated demand to persist for the foreseeable future. Key industry indices, which in some cases are near record levels, point to a continuation of project expansion into 2022, especially in the non-residential construction market. Physical utilisation of our fleet remains on a favourable trend, closing August 1, at 71.9 percent, reflecting the increasing demand for our young rental fleet.”

“Our recent disclosure regarding the pending sale of our crane business represents a transformative event for H&E. Following the close of the transaction, expected during the fourth quarter of 2021, we expect to fortify our position in the rental equipment business and in turn benefit from a more stable revenue base and margin appreciation while positioning the Company to capture incremental opportunities resulting from the highly favourable industry trends. In addition, proceeds from the sale are expected to be utilised in numerous ways, including further growth in our rental fleet, expansion of branch operations and other strategic growth initiatives that should advantageously position H&E for the expected industry expansion. Further steps have been taken in support of our transition to a pure-play equipment rental business. Recently, we reached an agreement to sell two earthmoving distribution branches in Arkansas and plan to start a new rental only branch in the Greater Little Rock market.”

Vertikal Comment

Not a bad result from H&E, with a strong bounce back from last year. The surprising move to sell off the crane business remains an interesting one, but it seems that whereas it was a critical part of the company’s success 15 years ago, that it is no longer the case today. In fact on the rental side crane utilisation was just 16.9 percent.

The deal is expected to complete later in the year, so now is the time it needs to clarify the strategy for expanding without the crane business. Expect to see some new store openings, perhaps a small acquisition or two and further additions to the remaining fleet.


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