Strength in Rental Partially Offsets Distribution Slowdown for H&E in Q2
Equipment rentals rose from $98.8 million in last year’s second quarter to $108.6 million this year, a 9.9-percent hike while H&E Equipment Services’ overall Q2 revenue dropped 6.4 percent from $280.4 million last year to $262.4 million. The company attributed the rental boost to fleet expansion, while average rental rates increased 0.9 percent year over year.
The company credited the rental segment for a 1 percent EBITDA hike from $78.7 million in last year’s second quarter to $79.4 million. The rental increase was offset by decreases in the distribution business. Average time utilization, based on original equipment cost was 70.3 percent compared to 72.7 percent a year ago and 67.5 percent in the first quarter. The company said inclement weather and weakness in the oil and gas markets resulted in underutilization compared to historical spring trends.
“The extreme rainfall and subsequent flooding that occurred in May throughout the central United States had a significant impact on our operations as construction activity slowed significantly for nearly a month in many of our regions,” said H&E Equipment Services CEO John Engquist. “Despite this unanticipated challenge and ongoing softness in the oil patch, rental revenues increased nearly 10 percent from a year ago. Most market indicators remain positive and we believe the recovery in the commercial construction markets will continue to accelerate throughout the remainder of this year and into 2016. Activity in June picked up significantly and this momentum is continuing into July. Increased commercial construction activity in other markets continues to offset the demand declines related to oil and gas. Overall we are pleased with the trends in our rental business and overall momentum in the commercial construction markets as we head into the second half of this year.”
For the first six months of 2015, rental revenue increased from $185 million in the first half of 2014 to $210 million, a 13.5-percent hike. Total company revenue for the first six months of the year dropped 5.4 percent to $489.8 million compared to $517.6 million last year.
H&E Equipment Services is based in Baton Rouge, La., and is No. 7 on the RER 100.
