Revenues decreased in the first quarter for H&E Equipment Services from $285.9 million in the first quarter of 2020 to $278.4 million this year, a 2.6-percent drop. Net income was $4.2 million compared to a net loss of $37 million a year ago. Adjusted EBITDA was $83.2 million compared to $99.2 million in the first quarter last year, a 16.2-percent slide. However, severe winter weather had a big impact on H&E, with about 40 percent of its locations closed for nearly a week and several areas without power and water for weeks.
Total equipment rental revenues for the first quarter of 2021 were $156.2 million compared to $174.5 million a year ago, a 10.5-percent decline. Rental revenues were $139.9, a decrease of 11.8 percent compared to $158.6 million in the first quarter of 2020.
“Rental Revenues” represent revenues from renting equipment, including re-rent revenues, an H&E official explained. “Total Rental Revenues” include “Rental Revenues” plus delivery and pickup fees and other ancillary rental fees, such as revenues from damage waiver insurance policies, environmental charges associated with renting equipment and fuel recovery fees charged to customers.
Average time utilization (based on original equipment cost) was 63.5 percent compared to 64.3 percent a year ago. The size of the company’s rental fleet based on original acquisition cost decreased 8.4 percent from a year ago, to $1.8 billion.
Average rental rates decreased 4 percent compared to a year ago and declined 0.2 percent sequentially.
Dollar utilization was 32 percent in the first quarter of 2021 compared to 33.1 percent a year ago. Average rental fleet age at March 31, 2021, was 41.5 months compared to an industry average age of 52.5 months.
At the end of the first quarter of 2021, the original acquisition cost of the company’s rental fleet was $1.8 billion, which is an 8.4 percent, or $161.0 million, decrease from the end of the first quarter of 2020. Dollar utilization for the first quarter of 2021 was 32.0 percent compared to 33.1 percent for the first quarter of 2020.
H&E opened two new branches in the first quarter of 2021: Lodi, Calif., near Stockton in the Central Valley area; and Concord, N.C., in the North Charlotte area.
“We are optimistic about our opportunities this year as our rental metrics are steadily improving,” said Brad Barber, H&E Equipment Services CEO. “On a year-over-year basis, physical utilization surpassed early March 2020 levels, which was before our business incurred any significant impact from COVID-19. Further, physical utilization is currently averaging considerably higher than a year ago. We are pleased to see rental rates stabilize and expect continued improvement as we progress into stronger seasonal quarters.
“Additionally, used equipment prices have improved, which indicates to us a healthy balance in equipment within the markets we serve. Forward-looking industry indicators like the ABI and DMI have also shown solid improvement in recent months. We believe our exposure to a very wide range of project types in the non-residential construction markets as well as our expansive service footprint in high-growth geographies positions us very well to benefit from these improving trends.
“Our financial results for the quarter were impacted by the historic winter storm in February, which significantly disrupted the on-rent momentum we had been building. Approximately 40 percent of our locations were closed for nearly a week and several areas within our footprint were without power and water for weeks. The forward momentum in our business has since resumed. Total revenues in the first quarter were only down 2.6 percent, or $7.5 million, from a year ago. Adjusted EBITDA decreased 16.2 percent, or $16.0 million, and margins were 29.9 percent compared to 34.7 percent a year ago. Margins were negatively impacted by revenue mix as higher margin rental revenues and parts and service sales decreased while revenues from our lower margin distribution business increased compared to a year ago.”
Barber added that the company remains focused on its growth strategy. “During the first quarter we opened two new branches and thus far in the second quarter, five new locations began serving customers. With seven new locations opened year-to-date, I am very pleased with the progress we have made toward our stated goal of eight-to-10 new branches in 2021. We also continue to explore opportunities to deploy capital for acquisitions in the general rental and specialty segments that will further expand our geographic scale and product offerings.”
Based in Baton Rouge, La., H&E Equipment Services is No. 7 on the RER 100.
