H&E Equipment Services(US:HEES)2021-11-02 20:11Company Operations - As of September 30, 2021, H&E Equipment Services operated 101 branch locations across the United States[87]. - H&E Equipment Services has been in the equipment services business for approximately 60 years, with a diverse fleet serving various high-growth geographies[86]. - The company’s rental fleet is among the industry's youngest and most versatile, focusing on construction and industrial equipment[86]. - H&E Equipment Services maintains a dedicated sales force focused by equipment type to manage the size, quality, and composition of its rental fleet[97]. Revenue Breakdown - For the nine-month period ended September 30, 2021, approximately 67.3% of total revenues were attributable to equipment rentals, 13.5% to used equipment sales, 9.0% to new equipment sales, 6.4% to parts sales, 3.2% to services revenues, and 0.6% to non-segmented other revenues[95]. - The company’s revenues are influenced by factors such as demand for rental equipment, rental rates, and general economic conditions[96]. Financial Performance - Total revenues for the three-month period ended September 30, 2021, were approximately $275.4 million, an increase of $23.5 million, or 9.3%, compared to the same period in 2020[119]. - Total revenues for the nine-month period ended September 30, 2021, were approximately $781.5 million, an increase of $42.3 million, or 5.7%, compared to $739.3 million for the same period in 2020[142]. - Total gross profit for the three-month period ended September 30, 2021, was $113.9 million, an increase of $25.9 million, or 29.4%, from $88.0 million in the same period in 2020[129]. - Total gross profit for the nine-month period ended September 30, 2021, was $297.1 million, an increase of $34.2 million, or 13.0%, from $262.9 million in the same period in 2020[152]. - Total gross profit margin for the nine-month period ended September 30, 2021, was approximately 38.0%, an increase of 2.4% from 35.6% in the same period in 2020[152]. Equipment Rental Performance - Equipment rental revenues increased approximately $35.7 million, or 22.1%, to $197.2 million for the three-month period ended September 30, 2021[120]. - Equipment rental revenues increased by $44.5 million, or 9.2%, to $526.0 million for the nine-month period ended September 30, 2021, compared to $481.6 million for the same period in 2020[143]. - Rental revenues increased by $35.8 million, or 8.2%, to $471.0 million for the nine-month period ended September 30, 2021, compared to $435.2 million for the same period in 2020[144]. - Rental equipment dollar utilization for the three-month period ended September 30, 2021, was 38.9%, an increase of 6.0% compared to 32.9% in the same period in 2020[122]. - Gross profit from equipment rentals increased $30.2 million, or 15.8%, to $221.4 million for the nine-month period ended September 30, 2021, with a gross profit margin of approximately 42.1%[152]. Cost and Expenses - Total cost of revenues for the nine-month period ended September 30, 2021, was approximately $484.4 million, with selling, general and administrative expenses at $213.3 million[102]. - SG&A expenses increased by $9.9 million, or 15.3%, to $74.4 million for the three-month period ended September 30, 2021, compared to $64.5 million for the same period in 2020[138]. - SG&A expenses increased $12.8 million, or 6.4%, to $213.3 million for the nine-month period ended September 30, 2021, with SG&A as a percentage of total revenues at 27.3%[162]. Cash Flow and Liquidity - Net cash provided by operating activities was approximately $202.1 million for the nine-month period ended September 30, 2021, compared to $217.1 million in the same period in 2020[167]. - Net cash used in investing activities was approximately $245.7 million for the nine-month period ended September 30, 2021, with purchases of rental and non-rental equipment totaling $363.2 million[169]. - As of September 30, 2021, the company had no outstanding borrowings under its $750 million Credit Facility, with available borrowings of $741.3 million, resulting in a total liquidity position of $976.3 million[175]. - At September 30, 2021, the company had cash on hand of approximately $235 million and available borrowings of $741.3 million, an increase from $724.3 million at September 30, 2020[179]. Strategic Decisions - The company agreed to sell its crane business for $130 million in cash, which closed on October 1, 2021[89]. - The company plans to pursue additional strategic acquisitions and open new start-up locations following the sale of its crane business[176]. - Future capital expenditures will depend on economic conditions and growth prospects, with flexibility to adjust expenditures based on performance[177]. Market Conditions - Equipment rental utilization levels began to improve in March 2021, returning to approximate pre-COVID levels[85]. - The company implemented measures to strengthen cash flow and manage costs in response to the COVID-19 pandemic, including payroll cost reductions and capital expenditure cuts[84]. - The company does not anticipate any negative impacts on liquidity from the COVID-19 pandemic or discontinued operations[179]. - There have been no significant changes in market risk exposure during the three months ended September 30, 2021[183].