| Back |
In the seasonally softer first quarter, which included one less calendar day, demand from local markets remained weak. In addition to the challenging demand trend, merger announcements in the quarter created pressure on the performance of the business. These factors contributed to a 7.2% decline in first quarter equipment rental revenues compared to the first quarter in 2024.
The Company’s branch expansion strategy continued with only those openings that were already planned and underway for the first and second quarters, including four openings in the first quarter, followed by one opening so far in the second quarter. These openings, combined with our existing operations, allow H&E to compete more effectively for new business opportunities.
We believe the merger with
FIRST QUARTER 2025 SUMMARY WITH A COMPARISON TO FIRST QUARTER 2024
- Revenues declined 14.0% to
$319.5 million compared to$371.4 million . - Net loss was
$6.2 million . Excluding transaction expenses, adjusted net income was$1.2 million compared to net income of$25.9 million . The effective income tax rate was 24.1%, or 27.4% adjusted for transaction expenses, and compared to 26.5%. - Adjusted EBITDA totaled
$131.2 million , a decrease of 18.9% compared to$161.7 million . Adjusted EBITDA margins were 41.1% of revenues compared to 43.6%. - Total equipment rental revenues were
$274.0 million , a decrease of$21.3 million , or 7.2%, compared to$295.3 million . Rental revenues were$242.9 million , a decrease of$18.9 million , or 7.2%, compared to$261.7 million . - Sales of rental equipment decreased 50.3% to
$23.9 million compared to$48.1 million . - Total gross margin declined to 38.7% compared to 44.4%.
- Total equipment rental gross margins were 38.2% compared to 43.3%. Rental gross margins were 43.6% compared to 48.5%.
- Average time utilization (based on original equipment cost) was 60.3% compared to 63.6%. The Company’s rental fleet, based on original equipment cost, closed the first quarter of 2025 at approximately
$2.9 billion . - Average rental rates, excluding acquisitions completed over the last twelve months, declined 2.0% compared to the first quarter of 2024, and 1.3% on a sequential quarterly basis.
- Dollar utilization was 33.1% compared to 37.0%.
- Average rental fleet age on
March 31, 2025 , was 43.2 months compared to an industry average age of 49.3 months. - Paid regular quarterly cash dividend of
$0.275 per share of common stock.
FINANCIAL DISCUSSION FOR FIRST QUARTER 2025
Revenue
Total revenues were
Gross Profit
Gross profit totaled
Rental Fleet
The original equipment cost of the Company’s rental fleet as of
Dollar utilization in the first quarter of 2025 was 33.1% compared to 37.0% in the first quarter of 2024.
Selling, General and Administrative Expenses
Selling, General, and Administrative ("SG&A") expenses for the first quarter of 2025 were
Income (Loss) from Operations
Loss from operations for the first quarter of 2025 was
Interest Expense
Interest expense was
Net Income (Loss)
Net loss in the first quarter of 2025 was
Adjusted EBITDA
Adjusted EBITDA in the first quarter of 2025 totaled
Non-GAAP Financial Measures
This press release contains certain non-GAAP (generally accepted accounting principles) measures (EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per share and the disaggregation of equipment rental revenues and cost of sales numbers) detailed below. EBITDA and Adjusted EBITDA are non-GAAP measures as defined under the rules of the
We use EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin in our business operations to, among other things, evaluate the performance of our business, develop budgets and measure our performance against those budgets. We also believe that analysts and investors use EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin as supplemental measures to evaluate a company’s overall operating performance. However, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin have material limitations as analytical tools and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. We consider them useful tools to assist us in evaluating performance because it eliminates items related to components of our capital structure, taxes and non-cash charges. The items that we have eliminated in determining EBITDA for the periods presented are interest expense, income taxes, depreciation of fixed assets (which includes rental equipment and property and equipment) and amortization of intangible assets. For Adjusted EBITDA, we eliminate non-cash items such as non-cash stock-based compensation expense and any other non-recurring items described above applicable to the particular period. However, some of these eliminated items are necessary to our business. For example, (i) interest expense is a necessary element of our costs and ability to generate revenue because we incur a significant amount of interest expense related to our outstanding indebtedness; (ii) payment of income taxes is a necessary element of our costs; (iii) depreciation is a necessary element of our costs and ability to generate revenue because rental equipment is the single largest component of our total assets and we recognize a significant amount of depreciation expense over the estimated useful life of this equipment; and (iv) stock compensation expense while non-cash, is an element of our costs. Any measure that eliminates components of our capital structure and costs associated with carrying significant amounts of fixed assets on our consolidated balance sheet has material limitations as a performance measure. In light of the foregoing limitations, we do not rely solely on EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin as performance measures and also consider our GAAP results. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of our financial performance or liquidity under GAAP and, accordingly, should not be considered alternatives to net income (loss), operating income (loss) or any other measures derived in accordance with GAAP. Because EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may not be calculated in the same manner by all companies, these measures may not be comparable to other similarly titled measures used by other companies.
We use Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share ("Adjusted Income (Loss) Measures") in our business operations to, among other things, analyze our financial performance on a comparative period basis without the effects of significant one-time, non-recurring items. We define the Adjusted Income (Loss) Measures for the periods presented as Income (Loss) from Operations,
We have presented in a supplemental schedule the disaggregation of our equipment rental revenues to provide further detail in evaluating the period over period performance of our rental business relative to equipment rental gross profit and equipment rental gross margin and believe these non-GAAP measures may be useful to investors for this reason. However, you should not consider this in isolation, or as substitutes for analysis of our results as reported under GAAP.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the financial tables accompanying this earnings release.
Conference Call
The Company will not hold a conference call to discuss first quarter 2025 reported results.
About H&E Rentals
Founded in 1961, H&E is one of the largest rental equipment companies in the nation. The Company’s fleet is 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 and has branches throughout the
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) general economic and geopolitical conditions in
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Amounts in thousands, except per share amounts) |
||||||||
| Three Months Ended |
||||||||
| 2025 | 2024 | |||||||
| Revenues: | ||||||||
| Equipment rentals | $ | 274,032 | $ | 295,325 | ||||
| Sales of rental equipment | 23,919 | 48,115 | ||||||
| Sales of new equipment | 7,425 | 10,412 | ||||||
| Parts, service and other | 14,079 | 17,505 | ||||||
| Total revenues | 319,455 | 371,357 | ||||||
| Cost of revenues: | ||||||||
| Rental depreciation | 94,952 | 91,398 | ||||||
| Rental expense | 41,998 | 43,407 | ||||||
| Rental other | 32,286 | 32,623 | ||||||
| 169,236 | 167,428 | |||||||
| Sales of rental equipment | 9,803 | 17,829 | ||||||
| Sales of new equipment | 6,023 | 8,639 | ||||||
| Parts, service and other | 10,799 | 12,596 | ||||||
| Total cost of revenues | 195,861 | 206,492 | ||||||
| Gross profit | 123,594 | 164,865 | ||||||
| Selling, general and administrative expenses | 111,581 | 114,278 | ||||||
| Transaction expenses | 9,791 | — | ||||||
| Gain on sales of property and equipment, net | 3,623 | 1,433 | ||||||
| Income (loss) from operations | 5,845 | 52,020 | ||||||
| Other income (expense): | ||||||||
| Interest expense | (15,997 | ) | (18,366 | ) | ||||
| Other, net | 1,978 | 1,552 | ||||||
| Total other expense, net | (14,019 | ) | (16,814 | ) | ||||
| Income (loss) from operations before provision (benefit) for income taxes | (8,174 | ) | 35,206 | |||||
| Provision (benefit) for income taxes | (1,966 | ) | 9,317 | |||||
| Net income (loss) | $ | (6,208 | ) | $ | 25,889 | |||
| Net income (loss) per common share: | ||||||||
| Basic | $ | (0.17 | ) | $ | 0.72 | |||
| Diluted | $ | (0.17 | ) | $ | 0.71 | |||
| Weighted average common shares outstanding: | ||||||||
| Basic | 36,362 | 36,196 | ||||||
| Diluted | 36,362 | 36,562 | ||||||
SELECTED BALANCE SHEET DATA (unaudited) (Amounts in thousands) |
||||||||
| Cash | $ | 10,322 | $ | 16,413 | ||||
| Rental equipment, net | 1,753,700 | 1,841,855 | ||||||
| Total assets | 2,678,060 | 2,795,530 | ||||||
| Total debt(1) | 1,368,385 | 1,453,311 | ||||||
| Total liabilities | 2,074,178 | 2,173,050 | ||||||
| Stockholders' equity | 603,882 | 622,480 | ||||||
| Total liabilities and stockholders' equity | $ | 2,678,060 | $ | 2,795,530 | ||||
| (1) | Total debt consists of the aggregate amounts on the senior unsecured notes, senior secured credit facility, and finance lease obligations. | |
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Amounts in thousands, except per share amounts) |
||||||||||||
| Three Months Ended |
||||||||||||
| 2025 | 2025 | |||||||||||
| As Reported | Adjustment | As Adjusted | ||||||||||
| Gross profit | $ | 123,594 | $ | — | $ | 123,594 | ||||||
| Selling, general and administrative expenses | 111,581 | — | 111,581 | |||||||||
| Transaction expenses | 9,791 | (9,791 | ) | (2) | — | |||||||
| Gain on sale of property and equipment, net | 3,623 | — | 3,623 | |||||||||
| Income (loss) from operations | 5,845 | 9,791 | 15,636 | |||||||||
| Interest expense | (15,997 | ) | — | (15,997 | ) | |||||||
| Other income, net | 1,978 | — | 1,978 | |||||||||
| Income (loss) from operations before provision (benefit) for income taxes | (8,174 | ) | 9,791 | 1,617 | ||||||||
| Provision (benefit) for income taxes | (1,966 | ) | 2,409 | 443 | ||||||||
| Net income (loss) | $ | (6,208 | ) | $ | 7,382 | $ | 1,174 | |||||
| Net Income (Loss) Per Common Share: | ||||||||||||
| Basic - Weighted average common shares outstanding: | 36,362 | 36,362 | 36,362 | |||||||||
| Basic - Net income (loss) per common share(1) | $ | (0.17 | ) | $ | 0.20 | $ | 0.03 | |||||
| Diluted - Weighted average common shares outstanding: | 36,362 | 36,735 | 36,735 | |||||||||
| Diluted - Net income (loss) per common share(1) | $ | (0.17 | ) | $ | 0.20 | $ | 0.03 | |||||
| (1) | Because of the method used in calculating per share data, the summation of the above per share data may not necessarily total to the as adjusted per share data. | |
| (2) | Adjustment relates to transaction expenses incurred. | |
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Amounts in thousands) |
||||||||
| Three Months Ended |
||||||||
| 2025 | 2024 | |||||||
| Net Income (Loss) | $ | (6,208 | ) | $ | 25,889 | |||
| Interest Expense | 15,997 | 18,366 | ||||||
| Provision (benefit) for income taxes | (1,966 | ) | 9,317 | |||||
| Depreciation | 108,199 | 101,898 | ||||||
| Amortization of intangibles | 2,598 | 2,487 | ||||||
| EBITDA | $ | 118,620 | $ | 157,957 | ||||
| Non-cash stock-based compensation expense | 2,811 | 3,788 | ||||||
| Transaction expense | 9,791 | — | ||||||
| Adjusted EBITDA | $ | 131,222 | $ | 161,745 | ||||
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Amounts in thousands) |
||||||||
| Three Months Ended |
||||||||
| 2025 | 2024 | |||||||
| RENTAL | ||||||||
| Equipment rentals(1) | $ | 242,871 | $ | 261,741 | ||||
| Rental other | 31,161 | 33,584 | ||||||
| Total equipment rentals | 274,032 | 295,325 | ||||||
| RENTAL COST OF SALES | ||||||||
| Rental depreciation | 94,952 | 91,398 | ||||||
| Rental expense | 41,998 | 43,407 | ||||||
| Rental other | 32,286 | 32,623 | ||||||
| Total rental cost of sales | 169,236 | 167,428 | ||||||
| RENTAL REVENUES GROSS PROFIT | ||||||||
| Equipment rentals | 105,921 | 126,936 | ||||||
| Rentals other | (1,125 | ) | 961 | |||||
| Total rental revenues gross profit | $ | 104,796 | $ | 127,897 | ||||
| RENTAL REVENUES GROSS MARGIN | ||||||||
| Equipment rentals | 43.6 | % | 48.5 | % | ||||
| Rentals other | -3.6 | % | 2.9 | % | ||||
| Total rental revenues gross margin | 38.2 | % | 43.3 | % | ||||
| (1) | Pursuant to SEC Regulation S-X, the Company's equipment rental revenues are aggregated and presented in our unaudited condensed consolidated statements of operations in this press release as a single line item, “Equipment Rentals.” The above table disaggregates the Company's equipment rental revenues for discussion and analysis purposes only. | |
Contacts:
Chief Financial Officer
225-298-5261
lmagee@he-equipment.com
Vice President of Investor Relations
225-952-2308
jchastain@he-equipment.com
Source: H&E Equipment Services, Inc.