High rental demand and a steadily growing footprint drove strong fourth-quarter and full-year performance for H&E Equipment Services.
The company, which is transitioning to a pure-play rental business, posted a total revenue jump of 5.1% for the fourth quarter of 2021. Revenues for the fiscal year totaled $1.1 billion, an increase of $55.8 million, or 5.5% when compared to 2020.
Total equipment rental revenues increased by 25.1% in the fourth quarter to $281.3 million – fueled primarily by higher average physical utilization and rental rate appreciation. Looking at the year, total equipment rental revenues jumped 13.2% to $729.7 million compared to 2020.
Meanwhile, used equipment sales decreased by 34.3%, and new equipment sales decreased 33.3% compared to the Q4 2020. Year-over-year used equipment sales dropped 3.2%, and new equipment sales fell 18.5%.
“Favorable industry trends remain in place, providing abundant opportunities for growth in 2022. Of note, feedback from our customers suggests elevated equipment rental demand is likely to persist through 2022 with broadening activity in the nonresidential construction and industrial end markets,” said CEO Brad Barber. “Strong performance in 2021 of key industry measures of future construction activity support the likelihood for further expansion in 2022 of these important end markets.”
He noted the recently enacted bipartisan infrastructure law as a key driver in 2022, with the company increasing the size of its rental fleet to meet the additional demand.
“Following 2021 gross capital expenditures of $437 million, gross expenditures in 2022 are expected to range from $550 million to $600 million, representing the largest annual gross spend in the company’s history,” said Barber. “The spending increase of near 40% year-over-year is expected to position H&E to meet intensified customer demand in 2022 and beyond.”
H&E sold its crane business to a wholly owned subsidiary of Manitowoc in July for $130 million in cash. The move was a big step in the company’s transition to a rental-only business.
“During 2021, we took important strategic steps to advance the transformation of H&E to a pure play rental business. These steps included continued investment in our rental fleet, which grew 10% in 2021, and the steady expansion of our branch network, as we added 10 new locations in regions with promising growth prospects,” said Barber.
“At the same time, we significantly reduced our exposure to the distribution business, ending the year as a pure play rental operation in 23 of the 24 states where we currently operate. As we enter 2022, successful execution of strategic initiatives has improved H&E’s competitive position in the equipment rental industry. Our young and versatile fleet is growing, and in 2022, we should experience the largest gross investment in our company’s 60-year history.”
Barber added: “Also, we expect our geographic footprint to expand in 2022, with our branch count expected to grow by more than 10 locations, including two new branches expected to be added in the first quarter that will provide increased access to new customers in expanding markets. Finally, our consolidated focus on rental operations has positioned the company for higher and increasingly more stable revenues through the cycle with margin appreciation. Meanwhile, our financial capacity, as evidenced by a conservative balance sheet and excellent liquidity position, provides a strong avenue for strategic growth.”