HEES - Earnings call transcript Q1 2022 | H&E Equipment Services, Inc.

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Operator

Good morning and welcome to H&E Equipment Services.

First-quarter 2022, Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Jeff Chastain, Vice President of Investor Relations. ahead. go Please

Jeff Chastain

first and the today Betsy XXXX We you the found and covering appreciate A morning website, issued Thank can H&E statements and our welcome and review us be our release press for of with quarter www.he-equipment.com. results of joining was copy this all you, along the everyone. quarter supporting H&E that's results. at First schedules

and the can Magee, morning Presentations. this before a accompanied website Brad and also Relations Statements be Investor is Barber Operating at you'll meaning On see and which I've and today's beliefs discussion but Our expectations within looking a the statements slide Financial tab this constitute I to and anticipate, about and morning's asked expressions statements, found as President today's turn on call Chief Officer, Chief statements. to list Corporate are discussion, him, by forward will participating Chief such call H&E X, and securities laws. over believe, you the Events Brad federal expect, the Officer Officer, words could remind forward similar under been Executive of Engquist, Leslie call looking Secretary. presentation, may our and begin contains of officers they containing the the executive Slide John

these on to actual call XX-K in these and the carefully statement. the XXXX involve in date statements you after reliance are financial or The does place the in periodic materially looking Also, are statements not Investors, associated company's measure we and today's Annual find call. are company consider supporting these uncertainties statement most and as Report evaluating factors investors results measures the publicly cause the for looking known disclosure our include those slide and schedules in Forward in differ harbor contained this included the the could forward-looking contained such an cautioned Form in GAAP not the and presentation risks company's and directly release, forward-looking listeners to undertake potential to of and risk safe other to non-GAAP reports. undue during is urged risks on forward-looking statements of other any the to factors update presentation required any will reconciliation comparable described referencing for which from unknown summary measures, A forward note appendix and materials. today's the to call, statements. in supplemental today's including press uncertainties revise

specifically noted, Unless a all discussed today's Finally. on continuing for comparisons basis. presented this and operations results morning are reported and

the the Equipment. preliminary details over to of Brad now call complete, With Officer Executive H&E I'll Chief Barber, turn

Bradley Barber

We review welcome in H&E. Good morning, Thank participation first you're XXXX results and as the everyone. and we you. Jeff. quarter your appreciate continued interest

As performance from XXXX to our impacts, seasonal seasonal an quarter abundance with opportunities, start. minimal weather. and minimal first We've a begun illustrated, year strong impacts the of was off

as XXXX. in quarter. remainder for for we outlook I provide narrow and drivers that the identify demand, the then strong growth financial start while excellence As I'll on from top rates, I meaningful rental metrics fleet On Slide financial posted quarter. to a the share my at consider rental highlights performance focus rising this and a towards maintained realizing underlying a results we the our impressive the of our progress the growth. first some Proceed please. Also, operational morning of discussion these of segment blend equipment the tight result, benefited our quarter fundamentals, to our supplies, X, will to stated our first-quarter healthy rental equipment of initiatives. want key thoughts excellent glimpse with on industry

I'll growth initiatives during our first Finally, the progress and 'XX achieved the excellent quarter. review

Lastly, and be X, Then on structure our will financial capital questions. first-quarter including on To updates will thorough Slide a happy we please. discussion to liquidity. results, with follow take your

all by demand improvement in measures. the activity significant We our showed of of is that customer encouraged due seasonal strength were challenges. across continued important the experienced commonly to highlights First-quarter lower quarter

XX.X%, As us physical posted a XX% timely coupled I in Consider implementation steps in to commented equipment at demand achieve XXX utilization the strategic increase rates, total were rental of and rental rental to equipment the revenues XX.X% expand which of million margin more an of in concentration XXXX metrics. quarter operations year in measured earlier, revenues environment, and points. enhanced first total taken XXX business or basis the compared gave to continuing basis. strong rental increased our quarter utilization in were to basis and ago equipment XXX.X shortages, EBITDA rental in XX% of quarter leading highest to elements utilization our XX% same quarter Adjusted year growth consolidated combined the XXXX, financial a rental an with exposure, margins. appreciation ago. The higher, revenues in rise first XX% higher quarter sustained rising first fleet follows points strong to outstanding with revenues strong and ongoing growth of was the compared of improvement represent leading quarter key to The measured years the a rate ahead X on the when allowing fleet

included rental of quarter cost quarter closed rates, representing of in or billion X, Slide original equipment $XX 'XX year XX% rental $X.X gross when fleet or of the up XXX.X quarter million. to on expenditures our please. first based growth first million compared Finally, OEC, over ago just and the our the

better rental quarter than million first totaled to Turning revenues the the $XXX.X our XX.X% or business, quarter same XXXX. in in

first the basis demonstrate quarter. a gross of or quarter strong ahead We continue the to ago of margin with XX.X% rental XXX margin points year in appreciation

than X.X% compared quarter same the with positive from rates, of place, In quarter, benefited closed quarter addition to million point in factors our to sequentially, seasonal in a in XXXX. better rental $XX these the XX.X%, strong first trajectory utilization dollar which the up improvement investment, rental basis X.X% quarter, increased and to in fleet segment gross XXX the year and ago utilization when First

impressive XXXX indicative concentration, Our advantages that tank of an increased regard the to fundamentally industry of is rental with industry. robust remains start and operating farm to the

revenues industry of Sound quarters, factors include fundamentals experience next utilization are well crude as excellent Several further we of the states to seasonal is to environment discernable rental as Architectural A both utilization, together no quarterly expected construction by support likely is likely investment. growth, with with non-residential with strength further H&E's in Index, driven the in it business The delays to and sequential or steady the Billings shortages. are prospects XX markets, is months. expected construction measurement worth enter largest seen several for as forecast equipment our in as continued including prices sustaining have we to limitations end X, the future scores industry improvement. registering inflationary equipment cancellations improvement. fleet or chain these support for XXXX. next to oil project of These Slide accounted industrial outlook ABI, Demand activity, other are from due continue Index market to labor our the XX demand, impact support absorb by persistent cycle as an expansion of are these XX% which for displaying as key impressive sharp two begun markets please. by rental customer increase Coast which or such rental located that supply and the supply It steady likelihood gas, in ongoing rental factors the accelerate Dodge Gulf the growth important is rate activity, suggest of the our to from branches right have that is over pressures such we OEM for end-markets disruption equipment the into portions of Momentum benefiting. noting, XXXX. encouraging the caused to Also,

projects 'XX infrastructure associated commencement is by 'XX spending investment to Finally, likely early continue years. the expected with and as infrastructure materialize spending several or the of to is with state for late Jobs

achieving over provide initiatives. I to progress call With $XXX performance, fleet growth million. while the we've On to million regard in to for gross We Leslie our the financial investment First review to XXXX we delays confident stated our turn to $XXX update defined please. in toward X, our of deliveries, goal. equipment capital of in I Slide rental $XX on want of an gross our recorded Before with minor our isolated a investment XXXX seen investment remain plan, million quarter some

second, XX equipment third We're planning to receive please. for majority typical during industry. is purchases of Slide quarters. the As our our the

growth advantageous the the investment, important capital initiatives addition effective remains growing as strategy and our our of this part environment. significant business address regional through fleet branch in In of our position our network company available highly to resilient an opportunities to both expanding expansion

to in of new this of construction Dorado. and addition first Arkansas access its we in X the included H&E established locations of the the to growing locations quarter our state, XX most The the as of the performance. the provide location These Following El of presence state Pennsylvania. than of year. in all sixth to openings quarter, two company our branch XXXX, new with expanded in fewer and Fairburn, Georgia, close of nonresidential demonstrating Philadelphia a opening currently, more Also, Philadelphia, new region. first industrial with over we and projects which representing the are following XX no the in branches We locations base branch first our location concluded the advance coast northern east will the Greenfield a strong in in goal where locations

has achieving H&E branch XX And openings locations stated these With confident we additions, our XXX network across states. in remain in three it's XXXX. of goal expanded to for

our be that efforts can confident through expansion are we Finally, acquisition. supplemented

that access geographies We to into penetration evaluate new continue to regions. -- further as we continue as existing opportunities static well offer to

As strong. this rental nature the comments I I Demand complete robust the remains our rental reiterate industry. for to want equipment morning, of fundamentally my fleet

constrained, to an of source is greater equipment grow. an demand positive position on of end enhanced Our Within markets equipment trajectory. attractive a rental with rental H&E A operating continue or and supply complement emerging for is further strong are that projects concentration. from turn brings. mix, environment, year to Infrastructure call performance. rates this On can Leslie what fleet, Magee Slide through a over network the growing of and acquisitions. Leslie. the and to branch young expanding this X financial remainder forward rental to now our look We we I'll The and

Leslie Magee

same morning, to combination $XX on quarter The of first revenues, improvement. million. The good Slide XX.X% with utilization and everyone. along quarter. And in higher the to the compared XXXX. XX, XX.X% $XXX.X I'll morning's million primary million compared begin quarter fleet $XXX.X increased first drivers the factors $XXX.X revenues rates Brad. this you, of supported financial to ago were Thank improved X review rental rental year grades, of when of million a which

describe demand utilization the As Brad by earlier, remain few first quarter seasonal to with of distraction XX.X%. resulting in customer strong

responded the XXXX, of million of a declined lower larger growing due Or capitalize rental sequential the in XXX to the XX.X quarter of up million first the high sales in point decision comparison strong X.X%. or utilization better the sales the XXXX. across X.X% first XX% period on XXXX, million as the XX improving increased with lines. to of equipment the was quarterly XX.X% XX.X fourth Rental basis. rising largely OEC fleet quarter. equipment company's compared to all decline quarter basis We million Similar OEC quarter to same that product For $XXX on first X.X% quarter or than XX.X Used rates the from close utilization since while to benefited

million million higher New of by experienced handling, equipment X.X of led of material other modest sales and sales or increase equipment. XX.X% XX a

$XXX.X profit million. in gross improved of $XX.X consolidated quarter Our million the first

points quarter an with profit Our the used comparison compared of increase segment in points rental or was in profit XXX to excludes quarter used due to XXXX. year-ago XX.X% while through compared trade-in bond XX.X% continued a in quarter, higher of compared same the to XX.X% obtained XX.X%. which XX.X%. equipment. a climbing included compared when margins, rental to of compared XX.X% fleet increase total to by compared was business to XX% same when margin XXX to mainly margins the basis XX.X% The of equipment equipment Gross and only margins gross equipment margin to XXXX basis improve, margins The XX.X% rental XX%, raised to margins to the resulted improvement to

$XX.X lower and XX.X% parts respectively. We New quarter and Slide or compared than for slightly equipment of at compared finished double XXXX from at margins quarter to modestly $XX.X were Income the quarter million of finally XX.X% the to first XX.X% of operations XX, reached service first to respectively, And XX.X% the First please. of XXXX, million. the quarter higher margins XX%. 'XX, XX.X% more total

in The with margins first gross the of the in was. year in compared income million ago income the $X.X improved of XX.X% to $XX.X million in by to to compared effective to increase The to Proceed Net the the XXXX on rental please. first million same XX.X% first and share quarter to X.X% of Proceed diluted over quarter. quarter was quarter, $XXX.X XXXX. diluted of compared in per Slide by partially comparison. year XXXX margin tax ago per quarter $X.XX XX, $XX.X XXXX share used million equipment, quarter the higher totaled SG&A. please. first compared rate the Slide the or XX.X% in higher EBITDA or XX, to period driven million $X.XX Adjusted quarter of offset first

increase and quarter to XX.X% total higher the first rose to improvement quarter used points XX% and to first expenses. the basis rental compared represented in partially of with due XX% margin revenue offset XX.X% a on higher by equipment, the to The EBITDA in quarter an revenue. adjusted favorable for The margins year-ago SG&A compared result mix XXX increase primarily

the when taxes, was XX, ago. Next of million fees. due to our quarter in employee incentive branch increased of to quarter significant XX.X% of up to the first increases year in to increase totaled with expansion please. related $XX.X the or were the million and SG&A of expansion on of than Branch the favorable 'XX, related employee profitability $X.X wages, XX.X% expenses related please. XX.X% XX, 'XX professional a XXXX. Slide quarter to in primarily facility salaries, XXXX, first million quarter compared the $XX.X Slide headcount, and compensation SG&A costs compared costs and in expenses revenues first were of quarter expenses greater XXXX first first less

was at $XXX.X pay X the was as minimum $X.X XXXX, $XXX.X a March fundamentals availability to million of quarter board by the availability billion, to XXXX intent the it to of excess noted you margins billion And Moreover, million. Slide balance AC of as financial the XXXX, ABL borrowings approval, support and on many ABL are under used approximately continue determine by billion and and that to strong industry Turning to cash cash net favorably of equipment always Slide $X XXXX. the stronger posture at please. utilization million. defined quarter $XX.X on months. metrics of is rental facility industry XX, And non-cash the gross expenditures XXXX under no XX.X% to in unsecured a dividend. our climate. quarter key with net of XXXX the the On to an XX, facility billion, average size our XX% $XXX of original Net to to improved XX.X times compared improved ingredients XX.X% And the $E fixed continue results capital to conclusion average quarter $X.XX of environment please. agreement the of over our XX, or to capital $XX rental cash no with XX, dollar expenditures Gross the of amended cycle. With And concerns. in of place increased stock to regular availability encouraged PP&E the million, X.X Free our have expenditures expenditures the our $X.X $XXX.X the to the notes. year first remains XX, XX.X over $XX age of in our to our leverage excess million million increase prior million March XXXX per the rental dividends healthy fourth XXXX. Net $XXX first of are from on structure, of of ¢XX.X maintain And operating grows for to covenant same paid the business in of than our the quarter regards robust were clearly PP&E of On and larger the compared compared XXXX in approaching fleet debt is fleet, in times we our before position definition, that's share average the the of of to million, quarter at and first cash million, and maturities period in close as the inventory. In availability we first were compared focus if a first comparison. close of availability transfers while capital start dynamic is than quarterly our firming Slide our was capital March first in subject are capital we was have summary, billion business. age just costs the XX, more liquidity of on to months totaled springing finally, first million, by please. And charge business is flow, enhanced X.X close fleet see covenant million. excess flow and a including was expenditures March quarter. to flow the an And excess with common from we our in XX, applicable. our can of measurement dividend based positively quarter were while earlier, respond quarter $X.X in dollars, the $XX.X quarter revenue as the XXXX equipment Slide XX, fleet on Brad this position a of

advantageously improvement. company to material progress in the our continue Furthermore, for resources growth support balance quarter. and initiatives liquidity sheet ample stated with the and expansion financial in excellent We first represent position To achievement. further demonstrated further strong of

So we the further our progress. And to it's to look rental a with provide we're on equipment and session the Thank in you. instructions please ready good forward business updating you Operator, Q&A be begin that, time to

Operator

Instructions] pressing the our we time, keys. [Operator Instructions] to pause will roster. assemble [Operator this momentarily At

Please today question from Research Ramsey first with Thompson Group. The ahead. comes Steven go

Steven Ramsey

high Do times period, slow going seems the tight very to QX, Hey, Maybe just very a utilization for this lower traditional as demand. being high QX, fleet sign fleet will talk broadly, of supply you seasonality to Maybe set good the higher as a relative a utilization, strong. but morning. up to of QX will be applied a time with start and view seasonally very demand could levels. this in at but forward, maybe comes you And bit in.

Bradley Barber

weather Good We We referenced at morning, just and were the most QX, quarter in Steve closed XX.X%. the out very continuing see opportunity. good to pleased. very of it's but lack seasonal a very robust We We're the season, honest market responses, additional question. there.

in $XXX expect in deploy that may that talked confident plan still see October. September, your the of lot of class we a about utilization that to million XX% We extent range, capital we're would year not we question, back to I We're well, level to above to have executing a XX.X, million $XXX we're nice very as belief XX part But hovering may XX% best as little to concerns. have XX% to normally we going healthy. XX% to here. start thinking we been that in. the our still in a the have We're range no we've

want utilization. is thing I about worried to we're So the indicate last would that

to last necessarily while XX, maybe see to utilization. deploying but utilization. we I going And to we're what capital, pace. class sequential to XX, best going to at lead make do improvement times, to to ramp think a think ramp do at going this capital on comment I this expect we're that the slightly we're so at time and The not running going rate on want the I that deploy certainly same of to continue that, we're on lot think ahead as metrics in industry I

Steven Ramsey

that my First easier and Helpful pricing in quarter. question on leads the next and into comp

Going bit from the and forward basis, the being Can on on bulky year-over-year challenging. given a year-over-year maybe this more QX comp you pricing factor? the of comps a range sequential improvement

Bradley Barber

will Yes. respond I John. John let that, to

John Engquist

Yes. Sure.

expect we for as have XXXX, to rate So quarter sequential year That the to our comps of when a to of get this rates X.X%. point your sequential QX about look, up in we were improvement I fact, every fully example, is year tougher progresses. mean,

about As a an we X%. for X% say with that, rate we're range I'd could comfortable bit comfortable be as the little really XXXX, exit better feel than far but

Bradley Barber

Yes.

digits. single We stated, expect again, I capital. thinking could we And think last the And call but low, But going has forward. rates in each on you squarely we, consistent on started mid-single-digits. we of stated thinking us improved. to of deploy only to we're middle our do execute now we going could the were price quarter improvement view Maybe, absolutely John, and better? a we're of and that more our just lot

Steven Ramsey

Great. pricing with And there, aligns how that in strong, have your market? feel large do with It the in feel reported like id your is pricing you curious peers line follow-on quick seems at your is least you like pricing a companies others.

Bradley Barber

well of that see, is would feedback, larger firms public high-quality is is supported are I particularly of we're our Rouse, We continue information And business. the think aligned. by use line to of very and any that's pricing encouraging. and in right I very that amount discipline of lot other comfortable with just our most the doing a price we anecdotal comment peers, among not

board. looking are across happen we going to the I that's this suspect any the think on to disciplined potential all is increases and And a end-user. cost pass I environment to

Steven Ramsey

the for then Is likely trailing months. interest taking with to strong debt has XXXX. for Helpful. of returns there from on your more for expectations an increased and in EBITDA dividends? capital special quick openness last meaningfully positive me, coverage 'XX And or XX Okay. one levels And already in expense XXXX, in

Bradley Barber

area interested want discipline. to been front. would our growth. we something at internally on the disappointed One stay this doing acquisition not want use point. at That's be has ourselves we've little for debt in We to a We been available

higher the And our with our these course, and Clearly been balance structure. has another to we a becoming Some than overall of could we systems meaningful perfect that -- growth. of were in. pricing our of little willing sheet piece our participate acquisitions

for So capital appropriate would large we activities, of dollars no, consideration those but a of not we billion portion types growing exhaust or we this would should focused the we available on the billion the that are in business. make

Steven Ramsey

Great. you. Thank

Operator

question from next Stifel. comes The with go Stanley Elliott Please ahead.

Stanley Elliott

about Hey, ability is any even you're good you to -- stores question. you the in had impact Thank the for into your labor expectations quarter taking extent, everyone. that a rest bit the the the if Could market open in morning, for little any year? of talk what seeing all on what or

Bradley Barber

employing a wages, part team mild not to capable not to could drive there's and year, look, occur. we last inflation but our inflation the office, that as tight calculus results and a mean, go see market's go been continues of to tight has be location nor complain saw and it's No. to where I could, and there's market most labor single ever we still not. Stanley, It everyone where or very a particularly wages.

Stanley Elliott

-- surcharges were -- the switching about to companies listened the morning, one the of on for equipment. they this talking the earlier Kind gears -- we side, they -- of equipment on

kind to something go the -- discussions. you're level of seeing is that on -- seeing conversations you -- off, that a expenditures just just of you're a out capital and in plan of or start forward kind magnitude basis, that and curious, that when You one

Bradley Barber

several discussion It's capital course the make spend it's of of with with manufacturers. We deal than a up the and our half majority manufacturers largest. vast of dozen XXX been a more that probably

Some that year not ask going no prices have the for surcharge they're those asked are to protected. for and and confirmed

on zero they talk we've a and we where at started to will very Some somewhere kind of orders have them have here. months. not speaking out fly in it And about a few stuck surcharges is go for in 'XX, for completely asked back of want I'm this and surcharges between they forward and have negotiated recent. just to said, and few weeks, down very came a okay, where

that We that going so really that have it. the for to would And X% in our average few But impact returns concern. between don't minimal. to causes prefer not will like trajectory. we nothing. way our X% ranges so change not we that us We it's do on And any

Stanley Elliott

stores. size When Where some like terms curious size similar of you locations, to of a thinking of these positioning. thinking the of the you about about are same maybe brownfield smaller how of in you're thinking Just you're of locations of amounts do of magnitude up the you individual about amount kind fleet? Are want fleet? open and kind

Bradley Barber

the of -- I same. mean more It's

Stanley Elliott

Yeah.

Bradley Barber

of locations. our We've Typically, And will in existing what year-one be a million to in $XX or see it $XX very average. that could these less, maturing could on be million inventory footprint. of similar around about more, you considerably talked that is but operations rule profile fleet thumb, always little the

Stanley Elliott

the you very Thank much start. congratulations everyone. Perfect on good and

Bradley Barber

you. Thank

Operator

Please question Fisher ahead. next The with go comes Steven from UBS.

Steven Fisher

know Thanks. Good to the morning. did ordered in you you've along profit ability your I gross talk fuel of that million What out a progressed. it it category. how about in other could quarter played rental dollars as about pass as costs the higher and

higher costs but how played of what that we that ahead of there think you out and that kind curious trajectory the the stayed profit I suggests should So that fuel expect is.

Bradley Barber

within there efficient haulers, how year-over-year and so lot, Also we're are use trucks our our yeah, are a at. use very is of and fuel are of turned we've it we margin that. certainly look you existing saw pleased that There third-party mean, Steven third-party Your with that them. I positive one and was several of with logistics, haulers. variables we

we're form and So do average not No, that is the to been in make but to hall higher simple end-user turned will stay that category result go more required and there's taken broad of certainly focused, surcharges There's and gains. able we're -- passed not going approach utilize be we've a lot we're the I'll passing complications data we're are to on direct to been some I'll no say that doing or you any fuel net our on how see we're on those other reason And to forward. for going so, fees. to charging we've positive about the fuel. get was really where we and just of continue we further margins it a

So responding fast expected. the time. getting we it's and We're that real we're results

Steven Fisher

terms book I'm than typical as branches. operations into people a pretty I up the your market, you ramp place, of they in about period of build absorbed get as I'm the these strong a curious, these and for any are same? the a guess sure or and utilized equipment, Great there's new getting you typically business. faster you're opening of might in expect

John Engquist

the at Steven, is depends pace. They our going Obviously, very ramp performance the locations is don't plan. are locations I two XX it the started with same opened stores. mean, to far, of our will We're to faster all market, market, thus ramp. ramping Brad first outstanding say, about the within the we the the that But the on far pleased better last the performance store we've all-in-all, as new I quarter year, right? spoke our according so in

new locations. with So of our we're results very our pleased

Bradley Barber

right exceed add, John's markets achieving been and been to the we're have them. pleasantly me many we’ve times and this right we point, more environment, reasons, our about that in let to the for Yeah and than expectations, many, surprised concerned picking

So markets. be opening locations us it's environment selected these for in a great to

Steven Fisher

I if Brad, it start does said you're biggest the really concerned a the things about I are correctly, is the seem you are think last this heard strong and concerned business. you're thing utilization Okay. you about Then What the like point? things, that at it to off lastly, you across

Bradley Barber

the right right excellent not operators from mean, executing is of have We've right real-time well. I pricing. selecting There an right we concerned order at the the lot very about. be today products to on a team We're we're got the markets. manufacturers who got

systems here. interest showed year-over-year coming to of I important the business? had We're geography, of information pressures, have year. the or unique this they maybe I First X.X% sequentially would strength into of up John my showing H&E stated at not out concerns our be And market providing is that about are If inflationary around quarter We platform into I, pricing. comments. that and to does that creep clearly there and prepared the to QX that and have more that the X.X% on and our rates

on that's to material have And postponements execute to frankly, near-term, as about, you the or going We we're see in or it's people due here had seen look, far expect I'm don't price thinking the give to cancellations plans. where if shortages. our to we any near-term no something, I but as

Steven Fisher

Thanks a lot. I'm good.

Bradley Barber

Thank you.

Operator

The next question Please comes with Securities. from Seth Wells Weber Fargo ahead go

Seth Weber

the you Do -- XX for in Hey, be on line leverage first sort you the think leverage everybody, on maybe really range? good to if morning. +% SG&A of side, operating the on some cost think stick incremental you here SG&A? Thanks. sustain year, the in should we this And SG&A can margin thoughts Do year? an I margins The quarter. should you get good wanted I could. incremental the that just some were Leslie, guess,

Leslie Magee

Good morning, Seth.

do I see course level quarter spur's incremental the as incremental some the that the ish% to see back range. of -- XX moderation far in - as expect So particularly throughout from more year, margins, the we half.

reasonable. think that's about, If you I talked just

comp, you necessarily relates particularly as it drivers especially like back of a bit also we estimates different on our full to driving color, Just of really current would our while to give that shifting fall I call But some good SG&A. really tourists, year comments last have year, leveraged you buckets. changed our our little warm are that this and of in not afar we combined drag it flow growth strong drivers generate the really with and the year. year just relates challenging to from the start which our would that Last primarily I were Then strategy, strong wouldn't year year. half utilization rate and as little this tell on flow-through create generally, I SG&A, XXXX. rate through for expect fleet more the puts a but made a

a SG&A closer of of little settle costs has half back to was and our will kind down to year which year as the closer that XXXX, revenues, expect that. somewhere began percentage We to down A close so full work and towards of number tick XX.X%, the the that to

Seth Weber

Right.

quarter Either constraints environment your going Brad an or where normal for perspective do OEM usually creating John, could second quarter, be typical to the be third strongest the or quarter heaviest seasonality think have for is quarter still CapEx are Okay. heaviest for your quarter you the CapEx? like I from guess, just aHnd is CapEx but a you second quarter

Bradley Barber

it Yeah, been for warm growth. of cadence will by be and QX heavier well quarter I will as with Seth a do clearly our to we combined the be QX. plan than that part were heaviest far. third start as could that's little the weighted some our think But planning the And a of second

QX, yes, So QX. I than heavier believe be will

Seth Weber

the then on you you've M&A seems Thank or the do Is to And more gen a to are down stick been -- talking it like start to think bit you'll Okay. little specialty you bit. little you. road going M&A, just rent? go that a lastly, about

Bradley Barber

rent we're eminent, in lead variety believe gen don't I and specialty want to businesses. we could continually something the certainly evaluate a that pipeline same we evaluate of that's types We to of have evaluating of acquisitions but that you we

diligently, something on equal We're valuation an there's can working find both it didn't a you. right at focus It's I soon. both we're. We hoping and fit for and looking lot the So right we're we're talked opportunities. and the we'll internally. tell about

Seth Weber

Got it.

Okay. Appreciate Thanks, everybody. it.

Bradley Barber

you. Thank

Operator

[Operator Instructions].

Operator

go America. Ross comes question next Bank Please Our with of ahead. from Gilardi

Ross Gilardi

Good morning, guys.

Bradley Barber

morning. Good

Ross Gilardi

pickup projects maintenance Is talked wondering of oil the Brad, projects can you I pipeline, share detail us additional like the think could refinery of gas seeing if it Color you you any in it and just more. and and nature more I'm interesting. it is about some the that upstream? on is little a could a give that will be

Bradley Barber

to seems oil. uptick accelerating seen the we've maintenance be Refinery in before

as product rigs fleet, the goes, we of oil as count, read products, of same and it's same They're primarily those rent are or products, you As across commercial assets are We're not fungible the far things the mix our field around markets we aware other footprint. but products different typical of nature. folks most the those rig within on diverting moving and industrial to read maybe entire a that type oil site.

So it's us. certainly helping

Texas that's I further Louisiana. South bleed I to if broader there's is the to to more important and dig hope something that, But South the helpful within happy markets maybe specific for be over you. think try in to I'd

Ross Gilardi

pipeline activity? about What You there? much seen anything

Bradley Barber

is more delay -- been activity, I infrastructure has can't And the or the larger that's, pipeline be say there for pipeline price I like there's activity driver I probably and additional capacity the would that the say there with think that but that. in spike see activity. pipeline you There's There's to -- pipeline bill. than a pronounced there. is prolonged.

there of now do So is just more lead it's has an here nothing believe of I same acceleration occurred right the to will unusual. that But that. what

Ross Gilardi

EBITDA they benefited excited most and Kind really then -- point really should pre-Covid timing got what as you much as anything one COVID really feel below about. was you're reopening out -- that or it fully We'll potential in -- where not. -- Okay. at is away. -- goes the like but --- not on sized Got growth that this it. -- pretty they see, or markets one from just like the of of well it's that that just as that is still has just aftermath of based And still

Bradley Barber

Listen, there's not much.

they're of Seattle were geography, the San to with footprint probably type that disruption at consistently, and our there, and across for normal all there be from project or would improving. down healthy If look more where markets probably abnormal. those than product types, You there prolonged period a the even closer Northwest activities time. a have to been has But and Francisco, resumed more

and hope I not to broad-based, do where So any as call but of we better. for of far area out particular a could don't we lot area think one as now opportunity continue there's a see I us. right concern That's to also

Ross Gilardi

Northwest. Pacific Coast to footprint mentioned it's I of time out to branch northerly. just certainly true you if ten All national interesting, is like over five regional drifting player your around do H&E more predominantly we're Southeast? just or the in years, right. the the term, your to a looking see strongholds and becoming of And Gulf more a more still And And see do you seems then you the player map longer company mean, be

Bradley Barber

player. aware And national talked that a the really before, XX Again. we public and run markets. current XXXX. systems about February of Well, years our we I our with business Often company that a We not in watched if aware took that our H&E size existing be we technology. national of in true times absolutely say will to serve the to could investment ability is believe multiple and have since our these our player everyone's Everyone sheet, of They've balance progress. infrastructure. Certainly, fundamentals. our

the our appropriately. the ability shown cycles over business We manage to have very

important clouded we the We rid existing It business. also plan geography And with we on focused that the that maybe say had the of and cyclical from good would what business. be really business. disruption I business warm expanding. and geography, are growing filling the we're our was you today, in. focus. crane up Manitowoc crane We to low predict that operate maniacally we on we was and margin. new starts getting business think is of to rental love but Sunbelt like love most or in to I The very we us, happy for owner It lumpy, a was is difficult

Ross Gilardi

I'm asked future pricing, seeing years to to more formula-based in in on but Okay. ground. And wondering, pricing more got opposed you just just are the lastly, future XXXX. about and moves just you as about off just think surcharges, for Oshkosh for I the Stan we they're talking consistency surcharges specifically, call approach

understand as, like said different to I amongst making surcharge. to is top for or Now is five consistent major pass-through. just how supply approach it it the your trying like I'm you just six or or is like approach as before on their sort what more of automatic these supply your varied

the inflation If future suppliers better going time delivery. of from order in and to the in the than protecting cost equipment the the order they time you Are be contracts to past? have you get of

Bradley Barber

will makes manufacturer. Yes. different really consistent, by Oshkosh measured respect is and I consistent a those the of respond approach. all think a to that I tell think is good based be decisions that a approach That's In like to of answer in they take companies near-term currently. I of and our what's lot make sophisticated sense. it's And JLG this, takes less product. you question supplier and off on just sell the that going more kind through And times focused, want sophisticated that the of and they much general, companies

not going Oshkosh, brought I'm how will say takes since you up but their to a to thoughtful So they that manufacturer list approach customers. I JLG price

same. and like a So situation manufacturers other the win-win we'd do see it's to

Ross Gilardi

you go point these are further the do situations, in inflation from Or of just from view of the to to costs really down costs those writing, adding actually them protect clauses if in like future. point as like cost Well well? delivery down they go or the of benefit even borders

Bradley Barber

come. same -- technology interim evolve. it else come we're with, the It's something few these do worth always mentioning, and about that's what that only so right fact remember folks, select like Tier have over four in Tier or surcharges with minimal. continue we've labor minimal times. offset to time, us that it's have the seen, still It we real very magnitude either cost final we one price at some almost surcharges things giving goes is seems The so manufacturers been not the minimal now, decrease reductions but everything's just It's on although is in. a it's talking you the there's today, these way increases If generally for multiple you cycles with been history four been we've from

price unfinished a the time, don't Now career, fighting pricing, basic At many it, an product people XXX% getting not all decreases. that very only that index products approach back When No, my and can approach. and and understood. and fighting a basically I've you at in that have not the so together lot come it's are seen until of same that's they they from ship give they complete. logistics logical manufacturers, they're have still a of that's componentry can't worked people

Ross Gilardi

that pricing will at suppliers, downside. of to to We would getting you going the adopt just if think kind I you'd approach. also agree I'm for be if formula-based guys are protected what from it That's

Bradley Barber

it And if in we I new new become may a It we did, work. it's practice will be that's more, understand would negotiate we'll what logical to but exactly how once it and not a it would It's XXXX concept. item and say. us, is is

Ross Gilardi

Okay. Thank you very much, Brad.

Bradley Barber

Thank you.

Operator

any concludes Chastain This back like to our question-and-answer remarks. conference over I the would closing turn Jeff for to session.

Jeff Chastain

for call conclude good the taking to you join and continued Thank everyone. appreciate Okay, you assistance we everyone speaking us, today, then. the again, Betsy. today with look for and your interest Equipment. time We forward to in and your day, H&E We'll

Operator

The now conference concluded. today's has attending for presentation. Thank you

disconnect. now may You

H&E Equipment Services (HEES) 27 Apr 222022 Q1 Earnings call transcript