H&E Equipment Services Boosts Revenue 24.5 Percent in Second Quarter
H&E Equipment Services posted $310.4 million in revenue in the second quarter compared to $249.4 million in the second quarter a year ago, a 24.5-percent increase. Included in total revenues were $9.8 million from the legacy CEC business in Colorado which H&E acquired Jan. 1, 2018 and $7.6 million from the legacy Rental Inc. business, which H&E acquired April 2.
Net income was $20.8 million in the second quarter compared to $9.9 million in last year’s second quarter, more than double. Adjusted EBITDA was $101.8 million in the second quarter compared to $79.1 million a year ago, a 28.7-percent hike, yielding a margin of 32.8 percent of revenues compared to 31.7 percent a year ago. CEC contributed EBITDA of $6.2 million with a margin of 63.5 percent, while Rental Inc. contributed $2.5 million of EBITDA with a margin of 33.1 percent.
Rental revenues increased 21.5 percent to $143.8 million in the second quarter compared to $118.4 million a year ago. New equipment sales increased 50.1 percent to $68.5 million in the second quarter compared to $45.7 million a year ago. Rental gross margins were 49.1 percent in the second quarter compared to 47.6 percent in Q217.
Average time utilization based on original equipment cost was 72 percent compared to 72.2 percent in the year-ago frame. The size of H&E’s rental fleet based on original acquisition cost leaped 22 percent year over year. Average rental rates increased 2.4 percent compared to Q217, and 0.7 percent sequentially.
H&E added nine branches this year with the CEC and Rental Inc. acquisitions, as well as one greenfield in Aleda, Texas, increased location count to 89.
Average fleet age on June 30, 2018, was 34.2 months. Dollar utilization was 35.4 percent in the second quarter compared to 34.9 percent a year ago.
“Our second quarter performance was strong as both our rental and distribution businesses achieved significant growth from a year ago,” said John Engquist, H&E Equipment Services CEO. “Rental revenues increased 21.5 percent resulting primarily from high utilization on a significantly larger fleet combined with solid increases in rates. New equipment sales increased 50.1 percent and were primarily driven by new crane sales and earthmoving sales. We are pleased with the growth opportunities in the industry as well as our efforts to capitalize on these opportunities.
“Our outlook for the balance of this year remains positive as demand in our end-user markets is strong and many industry indicators forecast continued growth in non-residential construction. Increasing the size and scale of our business is a strategic priority, which we expect to achieve through organic growth, acquisitions and Greenfield and warm-start branch expansion.”
Based in Baton Rouge, La., H&E Equipment Services is No. 10 on the RER 100.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.