Total revenue for H&E Equipment Services increased 18 percent in 2013 to $987.8 million, compared to $837.3 million in 2012. Equipment rental revenue jumped 17.4 percent to $338.9 million compared with $288.6 million in 2012.
H&E posted $259.6 million in fourth quarter revenue, compared to $250.1 million a year ago, a 3.8-percent increase. Rental revenues, however, jumped 12 percent to $90.4 million because of a larger fleet and improved rates compared to the previous year. Demand remained strong during the fourth quarter.
Gross profit for the full year increased 17.3 percent to $301.8 million from $257.3 million in 2012. Gross margin was 30.6 percent for 2013, compared to 30.7 percent in 2012. Gross margin on rentals increased 47.7 percent in 2013 from 47 percent in 2012, resulting from increased average rental rates and lower rental expense as a percentage of equipment rental revenues. On average, 2013 rental rates increased 6.9 percent compared to 2012. Time utilization in 2013 was 70.8 percent compared to 72 percent a year ago, based on original equipment cost. Time utilization based on units available for rent was 65.7 percent compared to 67.5 percent in 2012.
Average rental rates increased 5.6 percent in the fourth quarter. Dollar utilization was 36.2 percent compared to 36.4 percent in Q412.
“Our fourth quarter performance demonstrated across the board strength and momentum that has continued in our business,” said John Engquist, H&E Equipment Services CEO. “Demand for rental equipment was strong in the fourth quarter, driving higher consolidated margins and strong utilization even while operating a significantly larger fleet. Our combined distribution business remained solid as well, despite a lower level of year-end buying of certain new cranes from a year ago, which we believe was the result of reduced year-end tax incentives.
“We believe 2013 was a year of success and our outlook for 2014 is also positive as we believe there will be significant recovery in non-residential construction over the next several years. We feel there is reason to be optimistic regarding the outlook for our rental business given the demand we are currently experiencing. From our perspective, end-user demand for new and used equipment remains high and we expect this trend to continue based on current activity levels. We are increasing our fleet size to accommodate this anticipated growth.”
Engquist was bullish on the opportunities in the industrial markets.
“We also expect to benefit from the industrial markets we serve, particularly along the Gulf Coast, where we see the petrochemical, oil patch, refining, manufacturing and other related industries operating at high capacity levels,” he said. “It is being reported that capital spending scheduled to begin in 2014 relating to these industries, particularly in our Louisiana and Texas markets, may hit historically high levels. We believe overall market conditions are encouraging, and we will continue to focus on solid execution and improving our market position to capitalize on all of these positive trends in 2014.”
Based in Baton Rouge, La., H&E Equipment Services is No. 8 on the RER 100.
