H&E Equipment Services, Inc. (NASDAQ: HEES) (“H&E”, the
“Company”) today announced results for the first quarter ended
March 31, 2022, reporting strong year-over-year performance as
excellent industry conditions generated seasonally robust
utilization and further improvement in equipment rental rates. On
October 1, 2021, the Company sold its crane business, (the “Crane
Sale”). All results and comparisons for the periods reported are
presented on a continuing operations basis with the Crane Sale
reported as discontinued operations in certain statements and
schedules accompanying this report.
FIRST QUARTER 2022
SUMMARY
- Revenues increased 13.3% in the first quarter of 2022 to $272.5
million compared to $240.4 million in the first quarter of
2021.
- Net income was $16.3 million in the first quarter of 2022
compared to $1.9 million in the first quarter of 2021. The
effective income tax rate was 26.3% in the first quarter of 2022
compared to 26.9% in the first quarter of 2021.
- Adjusted EBITDA totaled $103.4 million in the first quarter of
2022, an increase of 34.5% compared to $76.9 million in the first
quarter of 2021, resulting in a margin of 38.0% of revenues
compared to 32.0% over the same period of comparison.
- Total equipment rental revenues for the first quarter of 2022
were $199.2 million, an increase of $46.0 million, or 30.0%,
compared to $153.2 million in the first quarter of 2021. Rental
revenues for the first quarter of 2022 were $177.2 million, an
increase of $40.0 million, or 29.2%, compared to $137.1 million in
the first quarter of 2021.
- Used equipment sales decreased 44.6% in the first quarter of
2022 to $21.5 million compared to $38.9 million in the same quarter
of 2021. Margins in the first quarter of 2022 improved to 41.7%
compared to 32.2% in the corresponding quarter of 2021.
- New equipment sales totaled $26.0 million in the first quarter
of 2022, an increase of 12.4% when compared to $23.2 million in the
first quarter of 2021.
- Gross margin improved to 41.0% in the first quarter of 2022
compared to 34.7% in the first quarter of 2021.
- Total equipment rental gross margins were 44.9% in the first
quarter of 2022 compared to 38.0% in the same quarter of 2021.
Rental gross margins were 49.9% compared to 42.7% over the same
period of comparison.
- Average time utilization (based on original equipment cost) in
the first quarter of 2022 was 70.4% compared to 64.1% in the first
quarter of 2021. The Company’s rental fleet, based on original
acquisition cost, closed the first quarter of 2022 at just over
$1.9 billion, an increase of $218.8 million, or 13% compared to the
first quarter of 2021.
- Average rental rates improved 6.5% in the first quarter of 2022
when compared to the corresponding quarter in 2021, and 1.6% when
compared to the fourth quarter of 2021.
- Dollar utilization improved to 37.6% in the first quarter of
2022 compared to 32.6% in the first quarter of 2021.
- Average rental fleet age on March 31, 2022, was 41.5 months
compared to an industry average age of 51.3 months.
- Paid regular quarterly cash dividend of $0.275 per share of
common stock.
Addressing the Company's positive first quarter results, Brad
Barber, Chief Executive Officer of H&E Equipment Services,
Inc., explained, “The combination of seasonally strong fleet
utilization, rising rental rates and fleet growth played a
significant role in our impressive start to the year. At 70.4%,
average physical utilization in the first quarter benefited from
strong demand and minimal seasonal delays. The measure was 630
basis points better than the year-ago quarter, which reflected
COVID-19 disruptions, and only 270 basis points below the fourth
quarter of 2021. Rental rates continued their positive trajectory,
closing the quarter 6.5% ahead of the year-ago quarter and 1.6%
better on a sequential quarterly basis. Finally, we grew our rental
fleet $218.8 million, or 13%, when compared to the first quarter of
2021, closing the quarter with a fleet OEC value of just over $1.9
billion. With these strong fundamentals in place, rental revenues
grew 29.2% when compared to the year-ago quarter, achieving a gross
margin of 49.9%, while adjusted EBITDA improved 34.5% over the same
period of comparison, posting a margin of 38.0%, or an increase of
600 basis points.”
Mr. Barber noted the strong start to 2022 and characterized the
full-year outlook for the equipment rental business as excellent,
commenting, “Our end-markets are displaying impressive strength,
driven by growing non-residential construction and industrial
activity. These important sectors accounted for 77% of our total
revenues in 2021. We are confident that our 2022 gross capital
expenditure projection of $550 million to $600 million is
appropriately timed and positions the Company to address the
expected growth across our regions of operation. As our rental
fleet grows throughout the year, it will do so in a business
environment that remains fundamentally robust."
Mr. Barber concluded by highlighting the Company's progress
toward 2022 growth objectives, stating, “In addition to growing our
fleet through significant capital investment, the expansion of our
branch network remains an important and effective part of our
growth strategy, as a focus on both efforts positions H&E to
address the expanding regional opportunities available in this
highly resilient business environment. During the first quarter, we
advanced our goal of no fewer than 10 warm start and greenfield
locations with the addition of two new branches and added a third
location following the close of the quarter. With these three
additions, H&E has expanded its branch network to 105 locations
across 25 states.”
FINANCIAL DISCUSSION FOR FIRST QUARTER
2022
Revenue
Total revenues improved to $272.5 million, or 13.3%, in the
first quarter of 2022 from $240.4 million in the first quarter of
2021. Total equipment rental revenues of $199.2 million improved
30.0% compared to $153.2 million in the first quarter of 2021.
Rental revenues of $177.2 million increased 29.2% compared to
$137.1 million in the first quarter of 2021. Used equipment sales
of $21.5 million decreased 44.6% compared to $38.9 million in the
same quarter of 2021. New equipment sales of $26.0 million improved
12.4% compared to $23.2 million in the same quarter of 2021. Parts
sales of $16.1 million were 3.2% better than the first quarter of
2021, while service revenues of $8.1 million improved 1.5% over the
same period of comparison.
Gross Profit
Gross profit of $111.6 million in the first quarter of 2022
increased 33.8% compared to $83.4 million in the first quarter of
2021. Gross margin improved to 41.0% for the first quarter of 2022
compared to 34.7% for the same quarter in 2021. On a segment basis,
gross margin on total equipment rentals was 44.9% in the first
quarter of 2022 compared to 38.0% in the first quarter of 2021.
Rental margins were 49.9% compared to 42.7% over the same period of
comparison. On average, rental rates in the first quarter of 2022
were 6.5% better than rates in the first quarter of 2021. Time
utilization (based on original equipment cost) was 70.4% in the
first quarter of 2022 compared to 64.1% in the first quarter of
2021. Gross margins on used equipment sales were 41.7% in the first
quarter of 2022, up from 32.2% in first quarter of 2021. Gross
margins on new equipment sales improved to 14.2% in the first
quarter of 2022 compared to 12.0% over the same period of
comparison. Gross margins on parts sales and service revenues were
27.1% and 65.4%, respectively, in the first quarter of 2022 and
compared to gross margins of 28.3% and 67.4%, respectively, in the
first quarter of 2021.
Rental Fleet
The original acquisition cost of the Company’s rental fleet as
of March 31, 2022, was just over $1.9 billion, representing an
increase of $218.8 million, or 13.0% from the end of the first
quarter of 2021. Dollar utilization for the first quarter of 2022
improved to 37.6% compared to 32.6% in the first quarter of
2021.
Selling, General and Administrative
Expenses
SG&A expenses for the first quarter of 2022 were $78.3
million, an increase of $10.1 million, or 14.9%, compared to $68.1
million in the first quarter of 2021. The higher expenses were
primarily due to an increase in employee salaries, wages, and
incentive compensation related to increased profitability and
headcount, payroll taxes and related employee costs, in addition to
higher facilities expenses and professional fees. SG&A expenses
in the first quarter of 2022 as a percentage of total revenues were
28.7% compared to 28.3% in the first quarter of 2021. Approximately
$3.6 million of SG&A expenses in the first quarter of 2022 were
attributable to new branches opened since the first quarter of
2021.
Income from Operations
Income from operations for the first quarter of 2022 was $34.7
million, or 12.7% of revenues, compared to $15.3 million, or 6.4%
of revenues in the first quarter of 2021.
Interest Expense
Interest expense was $13.4 million for the first quarter of
2022, unchanged from the first quarter of 2021.
Net Income
Net income in the first quarter of 2022 was $16.3 million, or
$0.45 per diluted share, compared to net income in the first
quarter of 2021 of $1.9 million, or $0.05 per diluted share. The
effective income tax rate for the first quarter of 2022 was 26.3%
compared to an effective income tax rate of 26.9% in the same
quarter of 2021.
Adjusted EBITDA
Adjusted EBITDA in the first quarter of 2022 increased to $103.4
million, representing 38.0% of revenues, compared to $76.9 million,
or 32.0% of revenues, in the same quarter of 2021.
Non-GAAP Financial Measures
This press release contains certain non-GAAP measures (EBITDA,
Adjusted EBITDA, and the disaggregation of equipment rental
revenues and cost of sales numbers) detailed below. Please refer to
our Current Report on Form 8-K filed with the Securities and
Exchange Commission on April 27, 2022, for a description of these
measures and of our use of these measures. These measures as
calculated by the Company are not necessarily comparable to
similarly titled measures reported by other companies.
Additionally, these non-GAAP measures are not a measurement of
financial performance or liquidity under GAAP and should not be
considered as alternatives to the Company's other financial
information determined under GAAP.
Conference Call
The Company’s management will hold a conference call to discuss
first quarter 2022 results today, April 27, 2022, at 10:00 a.m.
(Eastern Time). To listen to the call, participants should dial
844-887-9400 approximately 10 minutes prior to the start of the
call. A telephonic replay will become available after 1:00 p.m.
(Eastern Time) on April 27, 2022, and will continue through May 5,
2022, by dialing 877-344-7529 and entering the confirmation code
7814528.
A live broadcast of the Company’s quarterly conference call will
be available online at www.he-equipment.com on April 27, 2022,
beginning at 10:00 a.m. (Eastern Time) and will remain available
for 30 days. Related presentation materials will be posted to the
“Investor Relations” section of the Company’s web site at
www.he-equipment.com prior to the call. The presentation materials
will be in Adobe Acrobat format.
About H&E Equipment Services, Inc.
Founded in 1961, H&E Equipment Services, Inc. is one of the
largest rental equipment companies in the nation. The Company’s
fleet is among the industry’s youngest and most versatile with a
superior equipment mix comprised of aerial work platforms,
earthmoving, material handling, and other general and specialty
lines. H&E serves a diverse set of end markets in many
high-growth geographies including branches throughout the Pacific
Northwest, West Coast, Intermountain, Southwest, Gulf Coast States,
Southeast, and Mid-Atlantic regions.
Forward-Looking Statements
Statements contained in this press release that are not
historical facts, including statements about H&E’s beliefs and
expectations, are “forward-looking statements” within the meaning
of the federal securities laws. Statements containing the words
“may”, “could”, “would”, “should”, “believe”, “expect”,
“anticipate”, “plan”, “estimate”, “target”, “project”, “intend”,
“foresee” and similar expressions constitute forward-looking
statements. Forward-looking statements involve known and unknown
risks and uncertainties, which could cause actual results to differ
materially from those contained in any forward-looking statement.
Such factors include, but are not limited to, the following: (1)
risks related to the impact of the COVID-19 global pandemic, such
as the scope and duration of the outbreak, government actions and
restrictive measures implemented in response to the pandemic,
material delays and cancellations of construction or infrastructure
projects, labor shortages, supply chain disruptions and other
impacts to the business; (2) general economic conditions and
construction and industrial activity in the markets where we
operate in North America; (3) our ability to forecast trends in our
business accurately, and the impact of economic downturns and
economic uncertainty in the markets we serve (including as a result
of current uncertainty due to COVID-19 and inflation); (4) trends
in oil and natural gas could adversely affect the demand for our
services and products; (5) the impact of conditions in the global
credit and commodity markets (including as a result of current
volatility and uncertainty in credit and commodity markets due to
COVID-19) and their effect on construction spending and the economy
in general; (6) relationships with equipment suppliers; (7)
increased maintenance and repair costs as we age our fleet and
decreases in our equipment’s residual value; (8) our indebtedness;
(9) risks associated with the expansion of our business and any
potential acquisitions we may make, including any related capital
expenditures, or our inability to consummate such acquisitions;
(10) our possible inability to integrate any businesses we acquire;
(11) competitive pressures; (12) security breaches and other
disruptions in our information technology systems; (13) adverse
weather events or natural disasters; (14) compliance with laws and
regulations, including those relating to environmental matters,
corporate governance matters and tax matters, as well as any future
changes to such laws and regulations; and (15) other factors
discussed in our public filings, including the risk factors
included in the Company’s most recent Annual Report on Form 10-K.
Investors, potential investors and other readers are urged to
consider these factors carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on such
forward-looking statements. Except as required by applicable law,
including the securities laws of the United States and the rules
and regulations of the Securities and Exchange Commission, we are
under no obligation to publicly update or revise any
forward-looking statements after the date of this release, whether
as a result of any new information, future events or otherwise.
These statements are based on the current beliefs and assumptions
of H&E’s management, which in turn are based on currently
available information and important, underlying assumptions.
Investors, potential investors, security holders and other readers
are urged to consider the above-mentioned factors carefully in
evaluating the forward-looking statements and are cautioned not to
place undue reliance on such forward-looking statements.
H&E EQUIPMENT SERVICES,
INC.
CONSOLIDATED STATEMENTS OF
INCOME (unaudited)
(Amounts in thousands, except
per share amounts)
Three Months Ended March
31,
2022
2021
Revenues:
Equipment rentals
$
199,225
$
153,219
Used equipment sales
21,526
38,854
New equipment sales
26,036
23,173
Parts sales
16,059
15,556
Services revenues
8,134
8,011
Other
1,470
1,619
Total revenues
272,450
240,432
Cost of revenues:
Rental depreciation
60,021
53,453
Rental expense
28,759
25,065
Rental other
20,913
16,494
109,693
95,012
Used equipment sales
12,548
26,360
New equipment sales
22,329
20,399
Parts sales
11,704
11,153
Services revenues
2,814
2,615
Other
1,782
1,481
Total cost of revenues
160,870
157,020
Gross profit
111,580
83,412
Selling, general and administrative
expenses
78,278
68,145
Merger and other
—
100
Gain on sales of property and equipment,
net
1,386
154
Income from operations
34,688
15,321
Other income (expense):
Interest expense
(13,447
)
(13,443
)
Other, net
880
661
Total other expense, net
(12,567
)
(12,782
)
Income before provision for income
taxes
22,121
2,539
Provision for income taxes
5,825
684
Net income from continuing operations
$
16,296
$
1,855
Discontinued Operations:
Income from discontinued operations before
provision for income taxes
$
—
$
3,152
Provision for income taxes
—
856
Net income from discontinued
operations
$
—
$
2,296
Net income
$
16,296
$
4,151
H&E EQUIPMENT SERVICES,
INC.
CONSOLIDATED STATEMENTS OF
INCOME (unaudited)
(Amounts in thousands, except
per share amounts)
Three Months Ended March
31,
2022
2021
Net income from continuing operations per
common share:
Basic
$
0.45
$
0.05
Diluted
$
0.45
$
0.05
Net income from discontinued operations
per common share:
Basic
$
—
$
0.06
Diluted
$
—
$
0.06
Net income per common share:
Basic
$
0.45
$
0.11
Diluted
$
0.45
$
0.11
Weighted average common shares
outstanding:
Basic
36,363
36,185
Diluted
36,539
36,387
Dividends declared per common share
outstanding
$
0.275
$
0.275
H&E EQUIPMENT SERVICES,
INC.
SELECTED BALANCE SHEET DATA
(unaudited)
(Amounts in thousands)
March 31, 2022
December 31, 2021
Cash
$
351,797
$
357,296
Rental equipment, net
1,121,617
1,116,456
Total assets
2,123,363
2,080,447
Total debt (1)
1,250,000
1,250,000
Total liabilities
1,812,201
1,777,065
Stockholders' equity
311,162
303,382
Total liabilities and stockholders'
equity
$
2,123,363
$
2,080,447
(1)
Total debt consists of the aggregate
amounts on the senior unsecured notes and finance lease
obligations.
H&E EQUIPMENT SERVICES,
INC.
UNAUDITED RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(Amounts in thousands)
Three Months Ended March
31,
2022
2021
Net Income
$
16,296
$
4,151
Net income from discontinued
operations
—
2,296
Net Income from continuing operations
16,296
1,855
Interest Expense
13,447
13,443
Provision for income taxes
5,825
684
Depreciation
66,878
59,850
Amortization of intangibles
993
993
EBITDA from continuing operations
$
103,439
$
76,825
Merger and other
—
100
Adjusted EBITDA from continuing
operations
$
103,439
$
76,925
Net income from discontinued
operations
$
—
$
2,296
Provision for income taxes
—
856
Depreciation
—
2,444
EBITDA from discontinued operations
$
—
$
5,596
Merger and other
—
637
Adjusted EBITDA from discontinued
operations
$
—
$
6,233
Adjusted EBITDA
$
103,439
$
83,158
H&E EQUIPMENT SERVICES,
INC.
UNAUDITED RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(Amounts in thousands)
Three Months Ended March
31,
2022
2021
RENTAL
Equipment rentals (1)
$
177,182
$
137,146
Rental other
22,043
16,073
Total equipment rentals
199,225
153,219
RENTAL COST OF SALES
Rental depreciation
60,021
53,453
Rental expense
28,759
25,065
Rental other
20,913
16,494
Total rental cost of sales
109,693
95,012
RENTAL REVENUES GROSS PROFIT
(LOSS)
Equipment rentals
88,402
58,628
Rentals other
1,130
(421
)
Total rental revenues gross
profit
$
89,532
$
58,207
RENTAL REVENUES GROSS MARGIN
Equipment rentals
49.9
%
42.7
%
Rentals other
5.1
%
-2.6
%
Total rental revenues gross
margin
44.9
%
38.0
%
(1)
Pursuant to SEC Regulation S-X, our
equipment rental revenues are aggregated and presented in our
unaudited consolidated statements of operations in this press
release as a single line item, “Equipment Rentals.” The above table
disaggregates our equipment rental revenues for discussion and
analysis purposes only.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220427005041/en/
Leslie S. Magee Chief Financial Officer 225-298-5261
lmagee@he-equipment.com
Jeffrey L. Chastain Vice President of Investor Relations
225-952-2308 jchastain@he-equipment.com
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