Heavy Rains Dampen Second Quarter Results for H&E Equipment Services
H&E Equipment Services’ second quarter revenue declined 7.7 percent year over year, declining from $262.4 million in last year’s second quarter to $242.1 million, with headwinds related to weather and reduced crane demand from the oil and gas markets. Rental revenues were flat, $108.7 million compared to $108.6 million in the year-ago quarter.
Net income in the second quarter was $7.5 million compared to $11.5 million a year ago, a nearly 35-percent slide. EBITDA dropped 8.7 percent from $79.4 million a year ago to $72.15 million, yielding a margin of 29.9 percent of revenue compared to 30.3 percent in the year-ago frame.
Average rental rates decreased 0.3 percent compared to a year ago. Dollar utilization was 33.9 percent in the second quarter compared to 34.2 percent last year. Average rental fleet age on June 30 was 31.6 months compared to an industry average age of 42.7 months, the company said.
Total revenue for the first six months of 2016 was essentially flat at $489.1 million compared to $489.8 million in the first six months of 2015.
“The overall non-residential construction industry remains healthy and demand for rental equipment remains solid,” said John Engquist, H&E CEO. “Unfortunately, the heavy rainfall and subsequent flooding in South Texas and Louisiana was a major headwind during the quarter, having a significant impact on the demand for earthmoving equipment. Despite the weather challenges, our utilization based on OEC for the second quarter was 70.1 percent, down just 20 basis points from a year ago as a result of higher demand for aerial work platforms. As we expected, rental rates declined slightly from a year ago and our distribution business continued to be negatively impacted by weak crane demand as a results of the ongoing weakness in the oil and gas markets.
“From a mid-year perspective, demand in our non-residential construction markets remains favorable across our entire footprint. Despinte the significantly lower number of energy and chemical-related project starts compared to last year, activity in our Gulf Coast industrial markets is positive with ongoing maintenance work on existing plants and new projects. Texas remains a strong market with new projects unrelated to the oil patch, including new warehouses and distribution centers, infrastructure and industrial projects, and new office buildings to support the state’s strong, recent unemployment growth.”
Time utilization based on original equipment cost was 70.1 percent in the second quarter compared to 70.3 percent a year ago. Time utilization based on units available for rent was 67.5 percent in the second quarter compared to 67.7 percent in the year-ago frame.
Based in Baton Rouge, La., H&E Equipment Services is No. 8 on the RER 100.
