Solid quarter for H&E
US based H&E Equipment has reported a strong third quarter in terms of revenues and profit.
Total revenues for the nine months to the end of September were $1 billion, up 12 percent on the same period last year. All sectors grew from new equipment sales and other revenues. Pre-tax profits were 28 percent higher at $89 million. Rental rates are up 2.4 percent on the year, while utilisation was 71.4 percent compared to 71 percent last year, this on a fleet that was 12.3 percent larger.
Third quarter revenues were $353 million an increase of 9.6 percent on the same quarter last year, while pre-tax profits jumped 34 percent to $38.8 million. The average age of the fleet at the end of September was 34.9 months.
Chief executive Brad Barber said: “Our third quarter results were solid as we continued to experience broad based demand for rental equipment throughout our end-user construction markets. We achieved a 2.4 percent improvement in rates compared to a year ago and physical utilisation increased 40 basis points to 71.4%, which helped drive an 18.4 percent increase in rental revenues.”
“We are pleased with our year to date performance and ability to capitalise on the ongoing strength and opportunities in the well-diversified construction markets we serve throughout our 23 state footprint. Increasing the scale of our rental business continues to be a strategic priority for our business. We expect to achieve this goal through organic growth, acquisitions and warm start store openings. Based on our current performance, solid level of project activity and our customers’ feedback, our market outlook remains positive.”
Another excellent set of numbers from H&E, which has some decent momentum going, with much of its improvement down to solid organic growth rather than acquisitions. Interesting to note that while rental revenues are up sales of new equipment fell, possibly due to underlying economic uncertainty, which is flowing through to manufacturers.
It is beginning to look like we might be seeing the start of another cycle in which manufacturers suffer, while rental companies continue to thrive as they age their fleets while they wait to see what happens economically. If it goes on too long the uncertainty regarding a slowdown becomes self-fulfilling.
Nothing new about that – having said that good to see underlying demand is still strong.