H&E Equipment Services(US:HEES)2024-10-29 20:04Revenue Composition - Equipment rentals accounted for 82.0% of total revenues for the nine months ended September 30, 2024, with sales of rental equipment, new equipment, and parts/service/other revenues contributing 10.0%, 3.0%, and 5.0% respectively[87] - Total revenues decreased by $15.8 million (4.0%) to $384.9 million for Q3 2024 compared to Q3 2023[100] - Equipment rental revenues increased by $10.4 million (3.3%) to $326.2 million for Q3 2024[101] - Rental revenues increased by $7.8 million (2.8%) to $288.1 million for Q3 2024[102] - Sales of rental equipment decreased by $24.9 million (47.3%) to $27.8 million for Q3 2024[105] - Sales of new equipment increased by $1.4 million (11.2%) to $14.1 million for Q3 2024[106] - Total revenues increased by $49.1 million (4.5%) to $1.1 billion for the nine months ended September 30, 2024, driven by a $64.6 million (7.4%) increase in equipment rental revenues[121][122] - Rental revenues increased by $54.3 million (7.0%) to $825.3 million, while rental equipment dollar utilization decreased by 2.0% to 38.3% due to a larger fleet size[123] - Sales of rental equipment decreased by $13.6 million (11.0%) to $110.8 million, reflecting the company's fleet management strategy[125] - Sales of new equipment increased by $5.8 million (19.9%) to $35.1 million, driven by improved product line availability[126] Acquisitions and Branch Operations - The company completed three acquisitions: Giffin Equipment (3 branches in California) on November 1, 2023, Precision Rentals (1 branch each in Arizona and Colorado) on January 1, 2024, and Lewistown Rentals (4 branches in Montana) on May 1, 2024[81][82] - The company operates 157 branch locations across 32 states in the United States as of September 30, 2024[79] Rental Fleet Details - The rental fleet's net book value was $1.9 billion as of September 30, 2024, representing 66.5% of total assets, with an original acquisition cost of $2.9 billion across 63,727 units[94] - The rental fleet composition as of September 30, 2024: Aerial Work Platforms (44.9% of units, 33.2% of cost), Earthmoving (13.5% of units, 25.1% of cost), Material Handling Equipment (16.6% of units, 29.4% of cost), and Other (25.0% of units, 12.3% of cost)[95] - The original acquisition cost of the rental fleet increased by $156.0 million (5.6%) for the nine months ended September 30, 2024 compared to December 31, 2023, with the average age increasing by 1.1 months[96] - The rental fleet's average age was 40.8 months as of September 30, 2024, with Aerial Work Platforms at 51.6 months, Earthmoving at 29.5 months, Material Handling Equipment at 42.3 months, and Other at 26.4 months[95] Gross Profit and Expenses - Total gross profit decreased by $16.9 million (9.0%) to $171.5 million for Q3 2024[108] - Equipment rentals gross profit decreased by $2.0 million (1.3%) to $147.8 million for Q3 2024[109] - Sales of rental equipment gross profit decreased by $14.1 million (45.7%) to $16.7 million for Q3 2024[113] - Sales of new equipment gross profit increased by $1.1 million (66.8%) to $2.8 million for Q3 2024[114] - Parts, service and other gross profit decreased by $2.0 million (32.4%) to $4.1 million for Q3 2024[115] - Total gross profit increased by $9.5 million (1.9%) to $507.6 million, with a gross profit margin decrease of 1.2% to 44.8%[127] - Total cost of revenues for the nine months ended September 30, 2024 was $624.9 million, with SG&A expenses of $338.6 million[88] - SG&A expenses increased by $8.2 million (7.9%) to $112.4 million for Q3 2024 compared to $104.2 million in Q3 2023, with a 3.2% increase in SG&A as a percentage of total revenues to 29.2%[116] - SG&A expenses increased by $39.7 million (13.3%) to $338.6 million for the nine months ended September 30, 2024, primarily due to expansion efforts and increased employee-related costs[134] Financial Performance and Cash Flow - Net gains on sales of property and equipment increased by $0.9 million to $1.7 million in Q3 2024 compared to $0.8 million in Q3 2023[117] - Net other expenses increased by $4.2 million to $17.3 million in Q3 2024, driven by higher interest expense of $18.8 million due to increased borrowings[118] - Income tax expense decreased by $5.0 million to $12.3 million in Q3 2024, with an effective tax rate of 28.3% compared to 26.1% in Q3 2023[119] - Net gains on sales of property and equipment increased to $6.4 million for the nine months ended September 30, 2024, up from $1.9 million in the same period last year, a $4.6 million increase[135] - Net other expenses rose to $50.9 million for the nine months ended September 30, 2024, compared to $38.7 million in the same period last year, with interest expense increasing to $55.4 million from $44.5 million due to higher borrowings[136] - Income tax expense decreased to $34.4 million for the nine months ended September 30, 2024, from $41.0 million in the same period last year, with an effective tax rate of 27.6% compared to 26.2%[137] - Net cash provided by operating activities was $366.2 million for the nine months ended September 30, 2024, compared to $276.5 million in the same period last year[138][139] - Net cash used in investing activities was $422.1 million for the nine months ended September 30, 2024, including $157.8 million for acquisitions and $382.3 million for purchases of rental and non-rental equipment[140] - Net cash provided by financing activities was $58.5 million for the nine months ended September 30, 2024, with $1.4 billion in borrowings and $1.3 billion in payments on the senior secured credit facility[142][143] - Gross rental fleet capital expenditures decreased to $327.8 million for the nine months ended September 30, 2024, from $595.2 million in the same period last year, while gross property and equipment capital expenditures increased to $93.9 million from $55.4 million[149] - The company had $11.1 million in cash on hand as of September 30, 2024, with available borrowings of $461.3 million under the Credit Facility[147][151] - A quarterly dividend of $0.275 per share was paid on September 13, 2024, totaling approximately $10.1 million[152] - The company's earnings may be affected by changes in interest rates, with interest expense on the Credit Facility calculated based on the Base Rate or SOFR plus applicable margins[154] Segment Reporting - The company revised its reportable segments by aggregating parts sales and service revenues into one segment during the quarter ended June 30, 2024[86] Rental Rates and Utilization - Average rental rates for the nine months ended September 30, 2024 were approximately 1.5% higher than the same period last year[96]