Higher rental rates and increased utilisation have boosted H&E Equipment Services’ results for the third quarter of 2019.
The US-based rental firm’s overall revenues rose by 9.6% to US$353 million, compared to the third quarter of 2018.
Within that, total equipment rental revenues increased by 18.2% to $204 million, and rental revenues rose by 18.4% to $184.8 million, compared to the equivalent period in the previous year.
Brad Barber, the company’s CEO and President, said, “Our third quarter results were solid as we continued to experience broad-based demand for rental equipment throughout our end-user construction markets.
“We achieved a 2.4% improvement in rates compared to a year ago and physical utilisation increased 40 basis points to 71.4%, which helped drive an 18.4% increase in rental revenues.”
H&E’s net income was up 33% on the third quarter of 2018 to $28 million and its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 18% to $128 million.
A rise in the company’s gross margin from 35.6% in the third quarter of 2018 to 37.4% in the third quarter of 2019 was attributed largely to a shift in revenue mix to rentals and higher equipment rental gross margins.
The original purchase cost of H&E’s rental fleet grew by just over 12% to $2 billion – an increase of $216 million.
Barber said, “We are pleased with our year-to-date performance and ability to capitalize on the ongoing strength and opportunities in the well-diversified construction markets we serve throughout our 23-state footprint.”
Increasing the scale of the rental business continues to be a strategic priority, according to Barber, who added, “We expect to achieve this goal through organic growth, acquisitions and warm-start store openings.
“Based on our current performance, solid level of project activity and our customers’ feedback, our market outlook remains positive.”