H&E Rentals Increases 7.2 Percent in Rental Revenue in Second Quarter of 2024

H&E Equipment Services, now mostly doing business as H&E Rentals, posted $312.4 million in equipment rental revenue for the second quarter of 2024 compared to $291.5 million in the second quarter of 2023, a 7.2-percent increase. Total revenues for the quarter were $376.3 million compared to $360.2 million in the year-ago quarter, a 4.5-percent increase.

Adjusted EBITDA totaled $173.2 million, a 2.8-percent increase year over year compared to $168.6 million a year ago. Sales of rental equipment decreased 11.9 percent to $34.9 million compared to $39.7 million in Q223.

Average time utilization (based on original equipment cost) was 66.4 percent compared to 69.3 percent a year ago. The company’s rental fleet, based on original acquisition cost, closed the second quarter of 2024 at $2.9 billion, an increase of $279.0 million, or 10.7 percent.

Average rental rates increased 1.9 percent compared to the second quarter of 2023, and declined 0.1 percent compared to the first quarter of 2024.

“Rental revenues increased 6.5 percent compared to the year-ago quarter, with the increase led primarily by the ongoing expansion of our branch network,” said H&E CEO Brad Barber. “A total of 23 new locations, including acquisitions, were opened over the last 12 months ending June 30, 2024, providing important access to new markets with expanding opportunities. Also, we received support from rental rates, which improved 1.9 percent compared to the year-ago level. On a sequential quarterly basis, rental rates in the second quarter declined 0.1 percent. 

“The improvement in revenues was partially offset by lower average physical utilization, which closed the quarter at 66.4 percent, or a decline of 290 basis points compared to the year-ago result. Average physical utilization in the second quarter recorded a sequential quarterly improvement of 280 basis points. Finally, we closed the quarter with an original equipment cost (OEC) of $2.9 billion, a 10.7-percent increase from the year-ago quarter, including a gross fleet investment of $122.1 million in the second quarter and $196.5 million through the first six months of 2024. Our 2024 expected gross fleet expenditures remain in a range of $350 million to $400 million.”

Expansion into key markets

Barber went on to describe H&E’s sustained focus on expansion into key U.S. markets. “We opened six new branch locations during the second quarter that enhance our presence in the Southeast, Gulf Coast and Mid-Atlantic regions of the U.S., representing attractive geographies with increasing construction activity and excellent long-term potential,” he said. “Also, the completion of our latest acquisition in May 2024 resulted in the addition of four branches in northern and central Montana, increasing our presence in that state to six locations while maximizing our exposure to a diverse set of project opportunities. This long-term strategic commitment to expanding our market presence provides greater scale and advantageously positions the company for future opportunities and improved financial performance. We concluded the second quarter of 2024 with 149 branches across 31 states, representing growth of approximately 45 percent over the last 36 months ending June 30, 2024.”  

Commenting on the outlook for the equipment rental industry as a whole, Barber said, “We reiterate our view of a more moderate level of spending and project starts as the construction industry continues to transition to a lower level of activity compared to levels in 2022 and 2023. Higher project financing costs and more stringent lending standards have led to curtailed spending, especially among smaller contractors. Conversely, we are encouraged by the continued growth in mega projects and increased infrastructure project funding. H&E’s participation in these projects continues to rise as the company fully leverages its increased scale in the U.S. Mega projects are a meaningful growth opportunity for H&E and our industry, and given their size and long duration, they provide a more stable base of demand in support of key industry fundamentals.”

For the first six months of 2024, H&E posted $607.7 million in rental revenue compared to $553.5 million in the first half of 2023, a 9.8-percent hike. Total revenue was $747.6 million for the first half, compared to $682.7 million in the first half of 2023, a 9.5-percent jump.

H&E Rentals is headquartered in Baton Rouge, La., and is No. 6 on the RER 100.