H&E Equipment Services Revenue Surges 20.6 Percent in Fourth Quarter
H&E Equipment Services posted $294.7 million in revenue for the fourth quarter compared to $244.3 million in last year’s fourth quarter, a 20.6-percent increase. Rental revenues increased 10.9 percent to $127.7 million for the quarter, compared to $115.2 million in the year-ago quarter.
Net income was $85.9 million for the fourth quarter compared to net income of $12.4 million a year ago. H&E recorded an income tax benefit of $58.4 million versus income tax expense of $4.4 million a year ago, resulting from a one-time revaluation of its deferred tax assets and liabilities resulting from the decrease in the corporate federal income tax rate enacted in December.
Adjusted EBITDA increased 15 percent to $90.7 million in the fourth quarter compared to $78.9 million a year ago, yielding a margin of 30.8 percent of revenues compared to 32.3 percent in the year-ago frame. New equipment sales jumped 65.9 percent to $74.4 million in the fourth quarter compared to $44.9 million a year ago. Used equipment sales increased 28.8 percent in the fourth quarter to $32.1 million compared to $24.9 million in Q416.
Average time utilization (based on original equipment cost) was 74.2 percent compared to 70.3 a year ago. Average time utilization based on units available for rent was 71.3 percent compared to 67.6 percent last year. Average rental rates increased 1 percent compared to a year ago, and 0.6 percent sequentially.
Dollar utilization was 36.2 percent in the fourth quarter compared to 34.3 percent a year ago.
Average rental fleet age on Dec. 31, 2017 was 34.6 months compared to an industry average age of 44.4 months.
“Solid performance by both our rental and distribution businesses drove a 20.6 increase in revenues for the fourth quarter compared to the year-ago period,” said John Engquist, CEO of H&E Equipment Services. “The non-residential construction markets were exceptionally strong, resulting in extremely high demand for rental equipment. Physical utilization increased nearly 400 basis points to 74.2 percent for the quarter and we achieved a 1 percent increase in rates from the prior year…. We are extremely pleased with our results and the current trends in our end-user markets.
“We expect 2018 to be a very opportunistic year for our business and industry given the current strength in the non-residential construction markets. Oil prices are above a year ago, resulting in a rebound in exploration activity and energy-related projects. The new tax reform plan could also drive increased investment in construction. Should the administration and Congress pass an infrastructure bill, we believe the industry could see an expanded cycle. We also believe our operating environment is positive and we are focused on expanding our business in terms of both fleet size and geographic footprint. Our recent acquisition of CEC is representative of the types of acquisitions we intend to pursue – acquisitions which are very complementary to our business and increase our density in active markets or allow us to enter new markets. We also plan to continue our greenfield or warm start expansion strategy.”
For the full year, total revenues were $1.030 billion compared to $978.1 million in 2016, a 5.3-percent jump. Rental revenue for the full year was $479 million, compared to $445.2 million in 2016, a 7.6-percent year-over-year hike.
Adjusted EBITDA for the full year was $327.1 million compared to $302.3 million in 2016.
Based in Baton Rouge, La., H&E Equipment Services is No. 9 on the RER 100.
