30.10.2017

Solid quarter for H&E

US based sales and rental company H&E Equipment Services has posted a positive set of third quarter results.

Total revenue for the nine months was very marginally higher at $735.4 million with lower new equipment sales and service revenues offset by higher rental revenues. Pre-tax profits for the period were more than 20 percent lower due to entirely to a $25.4 million cost for the early retirement of long term debt, the seven percent debt was replaced with 5.62 percent notes that the company issued.

Moving on to the third quarter, revenues were 5.9 percent higher at €259.2 with increases in all sectors. Rental rates were 0.3 percent higher than in the same quarter last year, the average age of the fleet at the end of the quarter was 34.3 months. Pre-tax profits were reduced to $7.6 million from $20 million last year. due entirely to the $25.4 million dollar early debt redemption charge, partially offset by a $6.5 million gain the Neff merger break fee from United. The pre-tax profit from the business, was $26.4 million, an increase of more than 30 percent.
See United takes Neff

Chief executive John Engquist said: “Our rental business performed extremely well during the third quarter, capitalising on the strong broad based demand in the non-residential construction markets we serve. We achieved positive rates for the second consecutive quarter on both a year over year and sequential basis. Project activity was solid across our operating footprint resulting in a 120 basis point improvement in physical utilisation and a six percent increase in equipment rental revenues. While new equipment sales increased 9.3 percent, driven primarily by a 29.6 percent improvement in new crane sales, volumes remain low compared to historical levels due to the ongoing weak demand for new cranes.”

“We continue to evaluate acquisitions that are complementary to our business and broaden our geographic footprint and coverage density. Additionally, we are continuing our greenfield growth strategy. We believe the current trends in our end user markets remain favourable and customer sentiment is positive regarding project visibility into 2018.”

Vertikal Comment

Another good performance from H&E which demonstrates how it has insulated itself somewhat from the extreme fluctuations and changing nature of the new crane sales market. The costly debt switch looks timely and will pay dividends over the next few years.

The company is on course for a good year, with strong prospects for 2018, but will surely be on the lookout for an acquisition to replace the Neff deal, following its loss to United.