H&E Reports Increased Rental Revenues, Lower Income in Q2 2016
August 3, 2016 - H&E Equipment Services Inc. reported its results for the second quarter, which ended June 30, 2016.
While rental revenues increased to $108.7 million in the second quarter compared to $108.6 million a year ago, the company’s revenues decreased 7.7% to $242.1 million versus $262.4 million a year ago, and its net income was $7.5 million in the second quarter compared to net income of $11.5 million a year ago.
New equipment sales decreased 22.5% to $49.9 million in the second quarter compared to $64.4 million a year ago. Parts and service revenues on a combined basis decreased 1.2% to $43.6 million in the second quarter compared to $44.1 million a year ago.
The company’s gross margin was 33.8% as compared to 32.9% a year ago. Rental gross margins were 46.9% in the second quarter of 2016 and 46.7% a year ago.
Average time utilization (based on original equipment cost) was 70.1% compared to 70.3% a year ago. Average time utilization (based on units available for rent) was 67.5% compared to 67.7% last year. Average rental rates decreased 0.3% compared to a year ago. Average rental fleet age at June 30, 2016, was 31.6 months compared to an industry average age of 42.7 months.
John Engquist, H&E Equipment Services’ CEO, said: “The overall non-residential construction industry remains healthy, and demand for rental equipment remains solid. Unfortunately, the heavy rainfall and subsequent flooding in South Texas and Louisiana was a major headwind during the quarter, having a significant impact on the demand for earthmoving equipment. Despite the weather challenges, our utilization based on OEC for the second quarter was 70.1%, down just 20 basis points from a year ago, as a result of higher demand for aerial work platforms. As we expected, rental rates declined slightly from a year ago and our distribution business continued to be negatively impacted by weak crane demand as a result of the ongoing weakness in the oil and gas markets.”
Engquist said that from a mid-year perspective, demand in non-residential construction markets remains favorable across our entire footprint. “Despite the significantly lower number of energy and chemical related project starts compared to last year, activity in our Gulf Coast industrial markets is positive with ongoing maintenance work on existing plants and new projects,” he said. “Texas remains a strong market with new projects unrelated to the oil patch, including new warehouses and distribution centers, infrastructure and industrial projects, and new office buildings to support the state’s strong, recent employment growth.”
