Weather Impacts H&E Equipment’s Third Quarter Results

October 27, 2016 – H&E Equipment Services Inc. has reported its third quarter 2016 results. Revenues decreased 11.6% to $244.7 million vs. $276.9 million a year ago. Net income also dropped from $14.8 million in Q3 2015 to $11.7 million in Q3 2016.

H&E saw an improvement in rental rates from 2015 to 2016, reporting $118.5 million in the third quarter this year compared to $118.1 million a year ago. Rental gross margins were 49.5% in the third quarter of 2016 and 49.0% a year ago.

Average rental rates slightly decreased 0.7% compared to 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 fleet age at Sept. 30, 2016, was 31.5 months, compared to an industry average age of 42.4 months.

New equipment sales decreased 32.7% to $44.8 million in the third quarter compared to $66.6 million in 2015. 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% compared to 33.5% in Q3 2015.

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.

“Weather had an impact on our operations as Louisiana experienced a ‘1,000 year’ flooding event in mid-August,” said John Engquist, H&E Equipment Services’ CEO. “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.”