Record quarter for H&E
By Lindsey Anderson01 August 2022
H&E Equipment Services reported its second quarter results for the period ending June 30 with total equipment rental revenues of $227.6 million, an increase of $52 million or 29.6 percent, compared to $175.6 million in the second quarter of 2021. Rental revenues for the company were $201.2 million, an increase of $44.0 million, or 28.0 percent, compared to $157.2 million in the second quarter of 2021.
H&E also reported rental rates were up 9.4 percent compared to 2021 Q2 while its fleet size increased $228.2 million, or 12.8 percent, year-over-year and physical utalization was 73.2 percent.
“Our excellent second quarter financial performance showed the continuation of robust fundamental activity across our industry and significant progress toward our 2022 growth initiatives,” said CEO Brad Barber. “Rental revenues were 28 percent better than the same quarter in 2021 and improved 13.6 percent on a sequential quarterly basis.”
The company said it is on track to add no fewer than 10 new branches by year end, and it successfully added four new locations during the first half of the year.
H&E also reported its fleet size is now worth just over $2 billion (original equipment cost) - a new company record.
“Our ability to capitalize on the excellent business climate by growing our fleet despite ongoing supply chain disruptions contributed to our strong rental performance,” Barber said. “Our rental fleet grew by more than $228 million when compared to [2021’s] quarter and almost $148 million through the first six months of 2022.”
However, Barber noted, ongoing supply chain and equipment delivery issues will negatively impact the second half of the year.
“In a business environment characterized by exceptional equipment demand, supply chain disruptions remain an inconvenient but temporary reality of our industry and continue to hinder the time we deliver of a portion of our equipment orders,” he said during an investors call. “Due to the inability of certain manufacturing partners to meet their commitments, we reduced our client capital expenditure range to $465 to $500 million, or a reduction of approximately 16 percent at the midpoint.”
Discussing Q2 equipment deliveries, Barber said, “We did not achieve the level we hoped to in Q2, which was heavily loaded to the back side of the quarter. But weeks quickly turned into months and a handful of manufacturers, in fact, three specific manufacturers, contributed to about 80 percent of our decrease in our our CapEx guidance for the year.”
H&E is already getting orders for 2023 on the books, Barber said, with 50 percent of the company’s bookings already slotted for 2023.
Looking forward, H&E sees favorable market conditions to carry on, despite fleet constraints.
“We continue to experience strong demand for our rental fleet, while the industry supply of construction remains constrained. In fact, ... favorable conditions should persist as we continue through the seasonal strength of our business cycle. Also, it is encouraging to see leading indicators of construction activity remaining at levels that support expansion as reflected in the June ABI and the Dodge Momentum Index, with the latter measure reaching a 14-year high.
“In addition, the commencement of infrastructure projects serves as an additional source of demand toward late 2022 and into ‘23. I want to reiterate: We see no evidence of disruption to the favorable industry trends at present under the prevailing business conditions. Healthy utilization levels should continue for the balance of the year, with additional improvement in rental rates expected.”