31.07.2017

Strong quarter for H&E

US crane and access distributor and rental company H&E has reported a solid second quarter.

Starting with the first half, revenues declined 2.5 percent to $476.2 million, due almost entirely to a sharp fall in new equipment sales during the first quarter. Rental revenues for the six months were almost seven percent higher at $225.7 million. Pre-tax profits for the first half were nine percent higher at $24.2 million.

Moving on to the second quarter overall revenues were up three percent to $249.4 million driven largely by a nine percent rise in rental revenues to $118.3 million. Physical utilisation improved from 67.5 to 69.9 percent, while average rental rates were up 0.3 percent. The average age of the rental fleet age was 33.8 months. Pre-tax profits were almost 25 percent higher at $15.7 million.

Chief executive John Engquist, said: “Demand in the non-residential construction markets we serve was strong during the second quarter and as a result, rental revenues increased 8.9 percent, physical utilisation increased 210 basis points, and rental gross margins increased to 47.6 percent. We also achieved a 0.3 percent positive increase in rental rates compared to a year ago and compared to the first quarter of this year. We were very pleased to see positive rates this early in the year.”

“As we move into the second half of the year, we believe the trends in our business and the optimism in our end-user markets remain positive. We are also extremely excited about our pending acquisition of Neff Corporation, which we expect will significantly penetrate and grow our business in strategic business segments.”

Vertikal Comment

This is a very sound set of numbers with stability or improvements from all divisions of the business, while additional rental revenue is falling to the bottom line as you would always hope it does.

The company now faces a major task of completing and then integrating the Neff rental business into its operations. While this is not the first major acquisition for the company – it successfully acquired and integrated JW Burress in 2007, however that was a business very similar to its own having been a crane and heavy equipment business that had a rental division. Neff is a different beast having always been a pure rental company that only sold equipment as an aside. So it will be interesting to see how it goes. One major difference is that the current economic outlook is a good deal more promising that it was in 2007.