Equipment rental revenues for H&E Equipment Services in the first quarter of 2019 were $176.1 million compared to $143.3 million in the first quarter of 2018 (as adjusted), a 22.9-percent leap. The company posted $313.6 million in first quarter revenue compared to $260.5 million a year ago, a 20.4-percent increase.
Net income was $14.2 million in the first quarter compared to net income of $9.5 million a year ago. Adjusted EBITDA increased 24.7% to $100.9 million in the first quarter compared to $80.9 million a year ago, yielding a margin of 32.2 percent of revenues compared to 31.1 percent a year ago.
Rental revenues (as previously reported) for the first quarter of 2019 were $159.7 million, an increase of $30.3 million, or 23.4 percent, compared to $129.4 million in the first quarter of 2018 (H&E has recast 2018 information to conform to the current year presentation of hauling fees and related cost of revenues included within Equipment Rentals, rather than included within Other Revenues as previously reported. Upon the company’s adoption of new lease accounting guidance (ASC 842), certain ancillary fees associated with equipment rental activities, such as damage waiver income, environmental fees and fuel and other recovery fees are now included within Equipment Rental rather than Other Revenues.)
New equipment sales increased 27.1 percent to $59.1 million in the first quarter compared to $46.5 million a year ago. Used equipment sales increased 19.2 percent to $29.6 million in the first quarter compared to $24.9 million a year ago.
Gross margin was 36.3 percent compared to 35.5 percent a year ago. The increase in gross margin was largely the result of the improvement in rental and used equipment sales gross margins.
Average time utilization (based on original equipment cost) was 70 percent compared to 70.4 percent a year ago. The size of the company’s rental fleet based on original acquisition cost increased 23.4 percent from a year ago, to $1.9 billion.
Average rental rates increased 2.3 percent compared to a year ago and 0.3 percent sequentially.
Dollar utilization was 35.2 percent in the first quarter compared to 34.7% a year ago. Average rental fleet age at March 31, 2019, was 35.2 months compared to an industry average age of 46.5 months.
“Our business is off to a strong start this year, delivering favorable results for the first quarter,” said Brad Barber, president and CEO of H&E Equipment Services. “Demand for equipment in our non-residential construction markets remained healthy and our rental business produced strong gains, with rental revenues increasing 23.4% from a year ago. We achieved a 2.3-percent increase in rates versus the year-ago quarter and maintained solid utilization on a significantly larger fleet. With clearer visibility into the year, our outlook remains positive. Since the return to normal seasonal conditions, project activity in our end-user markets is accelerating and physical utilization is improving. We remain extremely focused on growing our business both organically and through acquisitions.”
Based in Baton Rouge, La., H&E Equipment Services is No. 10 on the RER 100.
