H&E Equipment Services Inc. announced results for the third quarter ended September 30, 2016, reporting a 9.1% increase in rental revenues over the second quarter but flat compared to a year ago.
John Engquist, H&E Equipment Services’ chief executive officer, said, “Weather had an impact on our operations as Louisiana experienced a ‘1,000 year’ flooding event in mid-August. 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% sequentially over last quarter and margins were strong at 49.5%. Solid demand for aerial work platforms and earthmoving equipment resulted in strong utilization, at 72.1% based on OEC. Rental rates decreased 0.7% from a year ago but increased 1.0% sequentially over last quarter.”
Engquist concluded, “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 non-residential construction markets remain healthy based on current bidding activity levels, solid backlogs, positive customer sentiment and the robust activity associated with ongoing large projects.”
THIRD QUARTER 2016 SUMMARY
- Revenues decreased 11.6% to $244.7 million versus $276.9 million a year ago.
- Net income was $11.7 million in the third quarter compared to net income of $14.8 million a year ago.
- EBITDA was $81.9 million in the third quarter compared to EBITDA of $86.2 million a year ago, yielding a margin of 33.5% of revenues compared to 31.1% a year ago.
- Rental revenues were $118.5 million in the third quarter compared to $118.1 million a year ago.
- New equipment sales decreased 32.7% to $44.8 million in the third quarter compared to $66.6 milliona year ago.
- Used equipment sales decreased 29.1% to $20.6 million in the third quarter compared to $29.1 million a year ago.
- Gross margin was 36.0% compared to 33.5% a year ago.
- Rental gross margins were 49.5% in the third quarter of 2016 and 49.0% a year ago.
- Average time utilization (based on original equipment cost) was 72.1% compared to 73.7% a year ago. Average time utilization (based on units available for rent) was 68.0% compared to 70.2% last year.
- Average rental rates decreased 0.7% compared to a year ago.
- Dollar utilization was 35.4% in the third quarter compared to 36.4% a year ago.
- Average rental fleet age at September 30, 2016, was 31.5 months compared to an industry average age of 42.4 months.