H&E Equipment Services reported a 17.4-percent increase in revenues in the fourth quarter of 2018 with $346 million compared to $294.7 million in the fourth quarter of 2017. Pre-tax income was $34.8 million, an increase of $7.2 million, or 26.1 percent year over year. Rental revenues jumped 27.6 percent to $163 million in the fourth quarter compared to $127.7 percent a year ago.
Adjusted EBITDA increased 26.2 percent to $114.6 million in the fourth quarter compared to $90.7 million a year ago, yielding a margin of 33.1 percent of revenues compared to 30.8 percent a year ago.
Average time utilization based on original equipment cost was 72.9 percent compared to 74.2 percent a year ago. The size of the company’s rental fleet based on OEC increased 25.7 percent from a year ago to $1.8 billion.
Average rental rates increased 2 percent compared to a year ago, and 0.5 percent sequentially.
For the full year, total revenues increased 20.3 percent to $1.2 billion compared to $1 billion in 2017. Equipment rental revenues leaped 23.6 percent to $592.2 million compared with $479 million in 2017. New equipment sales increased 29.3 percent to $262.9 million compared to $203.3 million a year ago. Used equipment sales increased 16.6 percent to $125.1 million compared to $107.3 million last year, while parts sales increased from $114.3 million in 2017 to $120.5 million, a 5.4-percent increase.
“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,” said Brad Barber, president and CEO. “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, which we believe to be a tough comp. The increase in new equipment sales was largely due to higher aerial and crane sales, up 95.5 percent and 5.7 percent respectively.”
Barber is bullish on his expectations for 2019. “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,” Barber said. “Even with a fleet size that is 25.7 percent or $361 million by original acquisition cost, larger than a year ago, physical utilization 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.”
At the end of the fourth quarter of 2018, of 2018, the original acquisition cost of the company’s rental fleet was $1.8 billion, an increase of $361 million compared to the end of 2017. Dollar utilization was 37 percent compared to 36.2 percent for the fourth quarter of 2017.
Based in Baton Rouge, La., H&E Equipment Services is No. 10 on the RER 100.