Rental Revenue Flat in Q3 for H&E Equipment Services Despite Louisiana Flooding
Although total revenue and net income declined, H&E Equipment Services’ rental revenue was flat with a small increase with $118.5 million in the third quarter compared to $118.1 million in the third quarter of 2015. Total revenues for the quarter were $244.7 million compared to $276.9 million a year ago, an 11.6-percent slide. Net income was $11.7 million in the third quarter compared to $14.8 million in the year-ago quarter, a 20.9-percent plunge.
EBITDA was $81.9 million in the third quarter versus $86.2 million a year ago, a 5-percent decrease. EBITDA margin was 33.5 percent, compared to 31.1 percent last year. New equipment sales slid 32.7 percent to $44.8 million in the quarter, compared to $66.6 million last year, while used equipment sales dropped 29.1 percent to $20.6 million from $29.1 million in the year-ago frame.
Rental gross margins were flat at 49.5 percent in the third quarter compared to 49 percent in Q315. Average rental rates decreased 0.7 percent year over year. Dollar utilization dropped from 36.4 percent last year to 35.4 percent in this year’s third quarter, while average time utilization based on original equipment cost was 72.1 percent compared to 73.7 percent a year ago. Average time utilization based on units available for rent was 68 percent compared to 70.2 percent a year ago.
Average rental fleet age on Sept 30 was 31.5 months compared to an industry average age of 42.4 months.
“Weather had an impact on our operations as Louisiana experienced a ‘1,000-year’ flooding event in mid-August,” said John Engquist, H&E Equipment Services CEO. “Our business incurred a short pause as construction projects were temporarily delayed but has since recovered. Our rental business generated revenues of $118.5 million, up 9.1 percent sequentially over last quarter and margins were strong at 49.5 percent. Solid demand for aerial work platforms and earthmoving equipment resulted in strong utilization, at 72.1 percent based on OEC. Rental rates decreased 0.7 percent from a year ago but increased 1 percent sequentially over last quarter.
“As we expected, our distribution business remained soft during the quarter as new equipment sales continued to be pressured by very low crane demand. When the energy markets rebound on a sustained basis, we believe there will be substantial pent-up demand for cranes. We continue to believe that the nonresidential construction markets remain healthy based on current bidding activity levels, solid backlogs, positive customer sentiment and the robust activity associated with ongoing large projects.”
For the first nine months of the year, equipment rental revenues were $330 million, compared to $328 million for the same period of 2015. Total revenue for the nine month period, however, was $733.8 million, compared to $766.6 million for the year-ago period, a 4.3-percent decline.
Based in Baton Rouge, La., H&E Equipment Services is No. 8 on the RER 100.
