H&E Equipment Services posted $98.8 million in rental revenue in the second quarter, up from $83.7 million in the second quarter last year, an 18-percent leap that the company attributes to strong physical utilization while continuing to expand the fleet because of high demand. Improved rental rates also contributed to higher rental gross margins. Total revenues increased 14.3 percent to $280.4 million versus $245.3 million a year ago.

Net income increased 45.5 percent to $15.7 million in the quarter compared to $10.8 million a year ago. EBITDA jumped 24.3 percent to $78.7 million, compared to $63.3 million in the year-ago frame, yielding a margin of 28.1 percent of revenues compared to 25.8 percent of revenues a year ago.

Utilization improved, with average time utilization based on original equipment cost at 72.7 percent, compared to 71 percent a year ago and 69.2 percent in the first quarter.  Average time utilization based on units available for rent was 67 percent compared to 66.3 percent in the year-ago quarter and 64.5 percent in the first quarter of 2014. Average rental rates increased 2.1 percent compared to a year ago and improved 1.8 percent from the first quarter of this year.

“Our business performed well during the second quarter as we continued to capitalize on the improving trends in non-residential construction, especially the escalating activity in the energy and chemical sectors along the Gulf Coast,” said John Engquist, CEO of H&E Equipment Services. “The momentum in our rental business continued as strong physical utilization combined with fleet investment and increased rates drove higher revenues and solid margin improvement. Our distribution business also continued to perform well, with new equipment sales increasing more than 20 percent and our combined parts and service business increasing more than 10 percent.

“Our outlook remains positive for the balance of this year based on the current trends in our business and high demand in our end-user markets. With continued targeted investment in our fleet as well as pinpointed greenfield and organic expansion, we are extremely focused on delivering equipment where demand dictates and taking advantage of growth opportunities in the marketplace.”

Engquist added that the energy markets are doing well and are promising going forward. “High levels of activity continue in the energy, petrochemical and manufacturing sectors in our Gulf Coast and Intermountain regions,” Engquist told an investors conference call. “These regions account for the majority of our revenue and gross profit. We expect demand in these markets to accelerate even more over the next several years due to anticipated significant new capital projects in these industries. In fact, we expect to open a new greenfield site in Texas within the next 90 days to leverage additional growth from increasing demand due to increased oil and gas exploration. We’re diligently planning expansion efforts on both a greenfield and organic basis to take advantage of the significant growth opportunities, not only in our Gulf Coast and Intermountain regions, but in our other less industrial regions as well, which are also benefiting from the improving trends in commercial construction.”

Engquist added that the current commercial construction environment is also positive, and that the company expects improvement throughout the balance of this year and into the next several years. “Just the capital projects and the pipelines slated for the Gulf Coast region related to major chemical, energy and manufacturing projects are significant in number and investment dollars, with most of this activity slated for the 2015 through 2017 timeframe.”

Based in Baton Rouge, La., H&E Equipment Services is No. 8 on the RER 100.