Total revenues decreased 16.6% in the second quarter of 2020 for H&E Equipment Services, dropping to $278.3 million from $333.6 million in the second quarter of 2019.
Total equipment rental revenues for the second quarter were $155.8 million compared to $192.3 million a year ago, a 19% decline. Rental revenues were $140.8 million compared to $173.8 million a year ago, also a 19% decrease.
Net income for the second quarter was $8.8 million compared to $22.6 million in the year-ago quarter. Adjusted EBITDA was $95.3 million in Q2, down from $118 million a year ago, a 19.3% dip. Revenue margin was 34.2% of revenue compared to 35.4% in last year’s second quarter. New equipment sales decreased 18.0% to $43.9 million in the second quarter compared to $53.6 million a year ago, while used equipment sales only decreased 5.9% to $34 million compared to $36.1 million a year ago.
Average time utilization, based on original equipment cost, was 59.5% compared to 71.2% a year ago. The size of H&E’s rental fleet based on OEC decreased 2.3% year-over-year to $1.9 billion. Average rental rates dropped 2.8% compared to a year ago and declined 2.8% sequentially based on ARA guidelines.
Dollar utilization was 29.6% in the second quarter compared to 36.5% a year ago. Average rental fleet age was 39.1 months compared to an industry average of 49.7 months, H&E reported.
“As a result of the COVID-19 outbreak and subsequent economic slowdown, the second quarter was a challenging period for our business,” said Brad Barber, H&E Equipment Services’ CEO and president. “Work continued in our end-user markets while some projects were paused, delayed, or cancelled. As we expected, demand for rental equipment declined which pressured rates, physical utilization, and ultimately, rental revenue. Utilization bottomed in April; subsequently utilization improved and stabilized with increased levels of activity in our end-user markets.
“Recently, there are some encouraging trends compared to the second quarter; however, we believe the headwinds related to COVID-19 will persist throughout the balance of this year. There is still tremendous uncertainty regarding the cadence of the economic recovery, including the outlook for the non-residential construction markets. We are working very hard to generate returns for our shareholders in the current environment, and I am very pleased with how our team has responded to these significant marketplace challenges.”
For the first six months of 2020, total revenues were $564.3 million compared to $647.2 million for the first six months of 2019, a 12.8% decline. Rental revenues dropped from $368.4 million in the first six months of 2019 to $330.3 in 2020, a 10.3% decrease. Declines were less for the six months as the pandemic shutdown began to take effect in mid-March. New equipment sales were $74.8 million for the six-month period compared to $112.7 million in 2019, a 33.6% decrease. Used equipment sales were basically flat year over year, declining from $65.7 million to $65.2 million. Service revenues actually increased for the six-month period, from $32.3 million to $33.5, and part sales dropped from $62.3 million to $56 million.