Total equipment rental revenues for H&E Equipment Services in the second quarter of 2022 were $227.6 million, an increase of $52 million or 29.6 percent compared to $175.6 million in the second quarter of 2021. Rental revenues were $201.2 million, an increase of $44 million or 28 percent compared to $157.2 million in the second quarter of 2021.
Total revenues for the second quarter were $294.7 million, compared to $265.7 million in the second quarter of 2021, a 10.9-percent increase. Net income was $27.9 million compared to $12.3 million in the second quarter last year. Adjusted EBITDA totaled $121.8, an increase of 28.8 percent compared to $94.6 million in Q221, resulting in a margin of 41.4 percent of revenues compared to 35.6 percent in the second quarter a year ago.
Average time utilization based on OEC was 73.2 percent compared to 68.7 percent in the second quarter of 2021. H&E’s rental fleet, based on original acquisition cost, was slightly more than $2 billion at the end of the second quarter, an increase of $228.2 million or 12.8 percent compared to the second quarter of 2021.
Average rental rates increased 9.4 percent compared to the second quarter of 2021, and 3.5 percent compared to the first quarter of 2022. Dollar utilization improved to 40.9 percent compared to 35.9 percent in the second quarter of 2021. Average rental fleet age on June 30, 2022, was 41.2 months compared to an industry average age of 53.6 months.
"Our excellent second quarter financial performance showed the continuation of robust fundamental activity across our industry and significant progress toward our 2022 growth initiatives," said Brad Barber, CEO of H&E Equipment Services. “Rental revenues were 28.0 percent better than the same quarter in 2021 and improved 13.6 percent on a sequential quarterly basis. This strong growth led to further appreciation in our rental gross margin, to 53.7 percent, or 380 basis points ahead of the previous quarter in 2022. This improvement in financial metrics was driven by enhanced contribution from both rental rates and utilization. Rental rates closed the quarter at an impressive 9.4 percent better than the year-ago quarter and showed a 3.5 percent gain over the first quarter of 2022.
“In addition, with high demand for our rental fleet, average physical utilization closed the quarter at 73.2 percent, or 450 and 280 basis points better when compared to the second quarter of 2021 and the previous quarter in 2022, respectively. We also grew our fleet, closing the quarter with a fleet original equipment cost of just over $2.0 billion, representing a record level for H&E. These results included a gross investment of $215.6 million since the close of 2021. Finally, the combination of excellent industry conditions and strong operational and strategic execution contributed to record adjusted EBITDA in the quarter of $121.9 million, while our adjusted EBITDA margin improved to 41.4 percent, or 580 basis points better than the same quarter in 2021 and 340 basis points ahead on a sequential quarterly basis."
Barber continues to see a positive business environment for equipment rental.
"Non-residential construction opportunities are plentiful across our regions of operation with no visible trends that suggest construction project delays or cancellations,” he noted. “Demand for our rental fleet remains strong, and current customer feedback suggests favorable conditions should persist as we address the seasonal strength of our business cycle. Also, it is encouraging to see key leading indicators of construction activity remaining at levels that support expansion. Under the prevailing business conditions, healthy utilization levels should continue for the balance of the year with additional improvement in rental rates expected."
Barber plans branch expansion in second half
Barber updated H&E’s 2022 strategic growth initiatives, saying, "In a business environment characterized by exceptional equipment demand, supply chain disruptions remain an inconvenient but temporary reality of our industry and continue to hinder the timely delivery of a portion of our equipment orders. Due to the inability of certain manufacturing partners to meet their commitments to our fleet investment for the year, we will reduce our planned capital expenditures by continuing to slow our fleet sales over the balance of 2022. Following this action, which is expected to result in a revised gross fleet expenditure of approximately $465 million to $500 million, we anticipate no change in our year-end OEC when compared to our initial internal expectation for the year.
“With regards to our branch expansion initiative, we remain confident in achieving our goal of no fewer than 10 additions in 2022. Four new branches were added through the first six months of the year, including our latest operation in Lakeland, Florida, which represents our ninth location in the state."
For the first six months of 2022, H&E reported equipment rental revenue of $426.8 million compared to $328.8 million in the first half of 2021, a 29.8-percent jump. And total revenues for the first six months of the year were $567.1 million compared to $506.1 million for the first half of 2021, a 12-percent increase.
Based in Baton Rouge, La., H&E Equipment Services is No. 7 on the RER 100.
