H&E Equipment Services Increases Rental Revenue in Q4, Full Year

H&E Equipment Services increased rental revenues in the fourth quarter by 3.7 percent to $115 million because of a larger fleet and still increased rental rates. Total H&E fourth quarter revenue was $273.2 million compared to $297.8 million in the fourth quarter of 2014, an 8.2-percent decline because of decreased revenues in the distribution business.

EBITDA decreased 6.6 percent to $81.3 million compared to $87.1 million a year ago, yielding a margin of 29.8 percent compared to 29.2 percent in the year-ago quarter. Average rental rates increased 0.6 percent year over year and improved 0.4 percent compared to the third quarter.

For the full year equipment rental revenues jumped 9.6 percent to $443 million compared to $404.1 million in 2014. Total revenues decreased 4.6 percent to $1.04 billion compared to $1.09 billion in 2014. New equipment sales slid 27.4 percent to $238.2 million compared to $328 million in 2014, while used equipment sales decreased 3.9 percent to $118.3 million compared to $123.2 million in 2014. Parts sales dropped 2.3 percent while service revenues increased 4.3 percent year over year.

“We delivered solid results for the quarter and year despite the turmoil in the oil patch, the historic flooding that occurred in May, and the exceptional rainfall we saw in many of our end markets in the fourth quarter,” said John Engquist, H&E Equipment Services’ CEO. “Our rental business continues to strengthen, with revenues increasing 3.7 percent for the quarter and 9.6 percent for the year, and helped offset the weakness in our distribution business, specifically new crane sales. Once again, we achieved positive rental rate growth both year over year and sequentially over last quarter, which we believe demonstrates the ongoing strength in the non-residential construction markets. We believe the uncertainty over the direction of the economy will help drive increased rental penetration as our customers believe it is more prudent to rent rather than make large capital purchases.”

For the most part Engquist is optimistic about 2016.

“Non-residential construction activity remains strong across our footprint, especially in the Gulf Coast where a significant number of large capital projects remain on schedule to begin over the next several years,” he said. “Furthermore, the Gulf Coast region continues to experience the highest levels of commercial construction starts and activity in the U.S. However, until the oil patch rebounds and stabilizes, we expect to continue to have limited visibility into our distribution business. At 31.4 months, we continue to utilize the youngest fleet in the industry, which allows us to take a conservative approach to capital spending in 2016. We intend to closely monitor manufacturer inventory levels and make our cap-ex decisions as close to the point of need as possible. We believe we can react to market demand, positive or negative, very quickly.”

Based in Baton Rouge, La., H&E Equipment Services is No. 7 on the RER 100.