HEES - Earnings call transcript Q2 2022 | H&E Equipment Services, Inc.

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Operator

Good morning, and welcome to H&E Equipment Services Second 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. Please go ahead.

Jeff Chastain

Okay. welcome, and Gary, you, everyone. Thank thank I as XXXX. your today for review want our of to we quarter results participation second you for the . copy all supporting results and the schedules, and release H&E the statements be issued website. the can with this morning A H&E along found, at of press was covering That's www.he-equipment.com.

at is in under website the Relations tab morning accompanied presentation, this H&E a discussion slide can the which and Presentations. Events Our by also be found Investor

within our Executive today's Chief the Joining X, constitute Engquist, are Corporate of Statements could, the securities call Officer; laws. opening me his as and words and Chief Officer; beliefs Magee, John I call and federal other meaning Barber, expressions Leslie Secretary. on forward-looking for Brad today's Financial I Operating Chief comments, turn today remind to statements you and the before about should Slide President and expect, anticipate Brad may, that and such over statements. Turn and statements to expectations believe, containing forward-looking call contains Officer

Form update safe uncertainties measures this in cause on and after included any the known in for statements. revise consider include statement. statements Forward-looking Also, not statements the company could in cautioned other such factors are uncertainties, periodic risk A company's call. which and reports. described referencing any materially the results of call today's call. Investors, contained evaluating reliance we to to risks forward-looking date factors not the other and during the financial undertake The place differ summary urged investors non-GAAP potential forward-looking forward-looking company's undue these of publicly and slide involve does to these are conference annual and or and carefully in listeners to are from the forward-looking contained unknown in XX-K those on statements harbor today's actual statement in is report presentation the risks XXXX

the directly periods supporting find appendix supplemental a and all presented the this unless measures, comparisons and the operations continuing these release most reconciliation will as reported materials. today's to to You finally, morning and the schedules And including press measure for and GAAP associated results required specifically noted, comparable discussed our for are basis. presentation disclosure an in on

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

Bradley Barber

We you, morning, Thank Jeff. welcome, appreciate participation quarter everyone, Good continued in and our review. XXXX to and second H&E. interest financial your

were quarter second significant Our results outstanding included and achievements. several

our benefit record we fleet, our industry Also, equipment we by to rental throughout from in growth highly continue to conditions a second -- favorable our for level want business. fundamental and company. quarter excellent expanded conditions which at resilient rates. These We rental led continue demand impressive the grow finished were

continues measures will our of on greater in to review key over further improvement in a during other fleet validated focus in discussion to branch today significant Our our and I will to level detail. improvement believe before financial rental generate half second metrics, with across investment margins transition the rental please. which X, to top and the financial same-store comments rental we our our of Slide the Proceed the positioned I begin I exposure for bridge cover operations. expansion intensified has I as rationale is for XXXX our strategic pure-play 'XX been as growth a 'XX continue strategy.

Slide to measures X, business on and Then take an and financial I please. results, close XXXX current and with will Next, be liquidity. structure on conditions happy On update equipment Leslie our a with updates follow business quarter in-depth the of performance rental segment view discussion will will growth industry we initiatives. including provide on an questions. your in capital second

exceptionally Given as quarterly H&E well robust environment, second impressive as financial key across sequential quarter growth. measures decisive year-over-year improvement the reported our business

of almost almost basis Also, on equipment the gross while $XXX.X grew total EBITDA while and example, million revenue For XX% a XX.X% adjusted $XXX.X year-over-year rental XX% posting million of XX.X% a margin. growth sequential improved from record year-ago sequentially posting of XX.X%. quarter

EBITDA the year-ago margin basis in adjusted the respectively. sequential quarter quarterly by XXX points, XXX Our exceeded margins and and

a result respectively. since by for XX% part demand, mentioned As strategy measures in I when XXXX second quarter meaningful growth equipment in reached a proved factors the were quarter previous our to on especially and performance. better execution same quarter rate X. to the the XX.X% fleet and and second equated basis. The Slide Rental quarter compared earlier, in and a XX.X%, utilization point $XXX.X best when of revenue million, representing utilization and high influential quarter physical XXX quarter, strong sequential expansion quarterly basis improvement XXX to year-ago compared improving and XXXX our rental was driven rental the in of our record

operational remained utilization and physical This pricing reinforced X.X% on use rental program. year-over-year proprietary basis strong, a by As the sequentially. and our rate was smart of improved achievement execution strong and rates a X.X% price exceptional remarkable integrated

factors was of sequential basis. points quarter was and year-ago these quarterly our quarter in place, XX.X% rental basis a XXX gross XXXX With the better the ahead XXX highest in achieved basis and level margin since the of on points

In the in to in XX.X% utilization reached previous year-ago the in compared XX.X% quarter the addition, and XX.X% quarter. dollar quarter

fleet ongoing strong the to by growing despite business our performance. Finally, our to contributed rental on capitalize chain climate excellent disruptions supply ability our

Our and XXXX. million fleet, when first of by the the grew rental months six more quarter $XXX than million $XXX through OEC compared to almost year-ago

a set strategic I last billion very financial of rental am results, another To $X employed we in our by fleet. success I with demonstrate result over summarize the our of XX growth, our quarterly months. results this record believe excellent several investment initiatives encouraged the the yet a As performance.

X, as robust We business climate please. initiatives we Slide other these benefit -- continue growth. to for benefit opportunity and continue from provides to from additional On to should these

activity, of visible or no equipment experience of opportunities the trends the across with cancellations. construction that drivers foundational suggest business business with We continue strong project solid. operation, delays construction remaining rental our Nonresidential are plentiful to regions

our -- continue We industry supply experience remains strong construction constrained. demand for supply of while rental fleet the to industry

fact, conditions we suggests should equipment persist current needs seasonal In feedback through favorable of as customer cycle. the continue addressing business strength our

support today, reaching activity at a second levels Dodge consistent construction of and As utilization at is of reflected XX-year expansion ABI with indicators Momentum it latter fleet high. levels Also, the as remains with encouraging the see Index, in the quarter. the measure leading to June remaining that the

of and rental prevailing into 'XX. late as see we improvement industry continue to commencement XXXX source expected. with I at demand toward an levels the rates healthy in want no addition, to evidence In conditions, of additional utilization for present. disruption project infrastructure balance business year the should favorable serves the of trends Under the additional reiterate; the of

Due year. of commitments, will in their the portion a capital the provide a turn I to our inconvenient of to reduction. by A orders. want environment business remain Before exceptional expect to equipment we our and our continue demand, of initiatives. our characterized partners a inability of initial approximately range of the expectations disruptions at for meet fleet million internal the sales I to $XXX mitigate million over $XXX reality X, chain our to reduction on hinder no to please. midpoint. of supply an to call time compared our deliver impact Leslie, In update growth planned change OEC equipment when business Therefore, to Slide industry but XX% to temporary planned XXXX expenditure reduced we manufacturing reduction the the certain this in our or year-end an

as We are [disappointed] this action necessary.

with the improving of sourcing prepared are we increase to we level to should regard revised However, expenditure our equipment. see conditions

branch were ninth to total in achieving fewer confident goal expansion latest than XXXX. of Four initiative, added through the location six count state including XX XXX. new first months our XX, our Florida, Regarding in our in the represents and the of we our year, operation branches branch in increases no our Slide please. Lakeland, which additions remain

third fourth the of remain growth busy to important our XXXX quarters of expect as and component strategy. execute we We very this over

remains opportunities. of the we In a addition, priority continue our for bolt-on evaluation operations through acquisition growing attractive H&E as

As utilization Leslie of among position with this X.X% strengthening and grew represent liquidity our central I to outcomes, best position. were growth. capacity believe our both in revenues growth to XX.X% concentration, consolidated strong continue quarter. for strong in growth are our support excellent which of of In the in total our to initiatives, results measures closing, and the outstanding and resources debt successful the can excellent be XX% rising These industry. rental quarter exceptional of competitive attest, rental rate And combined

to cycle, capitalize continue they serve of the ask to Additional year, the performance. going a everyone remainder the we're youngest the important second over to of our of branch business XXXX. locations to quarter fleets. source second through Leslie to and and can I'd openings us penetrate our prospective industry's I'm the confident on XX, created we over customers where move for robust half well one allow turn factors Slide please, Leslie? on and will financial call highly review of a us to in the These planned opportunities are

Leslie Magee

Slide I'll financial Good everyone. Thank on you, morning's Brad. morning, XX. this review welcome, and begin

appreciation XXXX. drove million when compared was record year-ago million rates rental in in factors $XXX.X The increase improved or and The quarter utilization revenues a rental revenue, totaled second $XXX.X strong XX.X% $XXX.X Our XX% the second which of on million quarter larger a $XX to of by combination million of same the compared quarter. fleet. in increase a higher driven to

quarter, X.X% X.X% Our were of year respectively. the sequential sequentially. rental basis improved and and and XX.X% year-ago points to a compared rates when XXX XXX Utilization increased better ago than

Used in million $XX XX, was grew XXXX second million. first XX.X% quarter $XX.X compared sales at and OEC June $XXX.X to of Our fleet to OEC a of or when experienced $XXX.X year-over-year equipment million decline to XXXX. million up compared quarter the the the

product We continue high across the resulting to quarter, capitalize sales lower utilization all lines. on in in equipment

a $X.X to equipment of largely sales. equipment or million million year-ago $XX.X in XX.X% compared other New the due quarter, sales declined to decrease

consolidated second million $XX.X Our the year-over-year million. in on basis, increased a record quarter a $XXX.X profit totaling gross

improving better basis. was by a in of the XXX to also addition and mix. same profit trade-in point which in business XX.X% quarterly margins ahead Gross to and the higher compared to and segment points comparison The rental margins sequentially quarter to in to exclude or basis obtained improved XX.X% to to improved XX.X% basis equipment to XX.X% rental XXX -- of XX.X% for margin record same quarter margin Used sequential XX.X%, set with equipment We which a margins XXX-basis a rental total due points rental, used margins, fleet-only equipment consolidated other included XX.X% XX.X% compared to compared the through on compared expansion to improved net mainly increase. XX.X%. gross margins of XXXX, on the margins in in quarter XXXX quarter, with

XX.X%. from margins operations the rose compared parts million to over unchanged while equipment the finally, at to quarter XX% please. to compared compared XX, XX%. Income in to And sales second $XX.X service Slide quarter to margins were New margins XX.X% increased million XX% $XX.X XXXX. were XX.X%, in second on of

XX.X% to to was year-ago SG&A. improved by other higher and partially quarter. rentals, in by margins compared driven quarter on The margin improvement improved higher the mix, rental XX.X% offset gross Second

year-ago diluted Let's proceed in diluted per Net quarter $XX.X to million share share than compared in to please. second income $XX.X or per or doubled million $X.XX the more $X.XX to XX, quarter. Slide the

XXX in effective same year the income in and compared and margin primarily period offset to improvement rental than equipment, to quarter, the please. the growing revenue to higher XXXX. a over second a $XXX.X to of better improvement total XX.X% quarter in second Slide million in against due to or was XX.X% partially best representing Our on rental of quarter XX, EBITDA company second of quarter The the Proceed compared higher the the Adjusted in to strong XX.X% mix comparison. adjusted revenue. margins second business The increased in favorable million rate XX.X% tax XX.X% prior $XX.X EBITDA the by improved points XX.X% SG&A. was quarter used result our basis with

fees quarter XX.X% to incentive with Next XXXX experienced quarter expenses The added Slide second expansion XX.X% the SG&A and year due related year-ago compared in Also, facilities of second to expenses the revenues in greenfield or XX. million this to XX.X% of a quarter locations the on second professional employee the of X SG&A expenses profitability totaled XXXX. headcount salaries, to compared compared second $X.X ago. the Slide costs was taxes. million to increase. wages, $XX.X in primarily higher and were in quarter higher million quarter, compensation to warm payroll We increase the XX. increased branch and up starts and period. over $XX contributed

expenditures quarter PP&E were PP&E fleet Gross totaled CapEx including transfers capital CapEx to quarter the from cash second fleet capital in noncash and rental million, million, in the Net was $XXX.X Turning was inventory. flow. $XXX net capital the quarter expenditures million. for while million. Gross $XX.X expenditures $XX.X second

age and improved continues to Our XX.X XX, of the months XXXX, fleet as June average favorably of industry average fleet to slightly age compare XX.X months. to

XXXX. or billion, experienced based XX.X% June of capital compared larger debt for expenditures the Slide improved XX, $XX the on the close XX, just second XX.X% the increase quarter XXXX, original close first at dollar on $XXX Move million compared Average the XX.X% XX. close negative rental the approximately of increased of year the utilization of of our to in million. million quarter to flow quarter. XX, we XXXX. free million second June Following was cost of equipment over the $XXX cash $XXX.X the $X the On please. in in at quarter, our of to prior was XXXX an fleet than size quarter to Net Slide quarter second

appreciation second please. quarterly the results period conclusion XXXX. are while our dividends was our evident please. second minimum of XXXX, no was decision summary, continue to leverage over $X.XX the XXXX of XX, determine concentration. notes. equipment to over quarter I robust through of closed demonstrate the pay same the our agreement as business million. rental unsecured In Slide rental of definition, on is what believe By X.Xx our to used in in This June $XX senior position to and performance rental And have with to if to We facility a our place, by net is been defined distribution gross profit approximately we favorable XX, of with results our measurement of consistent intent industry. margin maximize under ABL availability representing Our Slide billion at the continue $XXX.X excess continue And consolidated it $XXX.X measures of second our especially many approval, billion months, modifications maturities quarter X.Xx subject we the meaningful of $X.X excess time profit, frame, to its can XX second follows compared comparison. the per of availability amended With a balance of margin. of million. H&E and $X.XXX our the liquidity Board $X.X dividend. fundamentally and stock reduce last applicable. achieve we a availability million revenue, share second EBITDA common excellent with a availability XX, across is this the availability billion, dividend charge facility is finally, financial have borrowing margin, now of XXXX highest including under paid And with growth quarter better improvement and quarter cash performance business our over positioned XXXX on billion, demonstrate quarter $X metrics. fixed of over the is Revenue covenant the regular springing adjusted And financial while which these no for the rental we ABL key to trend our Excess These just intensifying to exposure concerns. cycle. gross impressive the to in pattern of before have

Operator, growth substantial interest in acquisitions role expansion instructions. highlighted will begin a further are continued we and the larger as ready the presence. investment industry initiatives, provide build in that, fleet, our to work a are which period. record to With our in play future strategic branch bolt-on Our by rental now we please Q&A

Operator

[Operator Steven Thompson Instructions] Group. with The question is Ramsey from first Research

Steven Ramsey

that couple think of And questions Maybe to or you of in secondly, supply demand, dynamic geographies topic. regions? that a do start is this with all into one, then lasts this against this Number the strong XXXX? on very tight case fleet

Bradley Barber

We're geographies geographies all steady serve. physical all in staying regions. case the we and and the is witnessing up across meaning very just utilization the same levels, It year-over-year consistently we're Steven. of

pertains some year. of level tough it's going achieve going the to manufacturers, sequentially it this be continue also the to continue remainder forward And if to of certainly seeing improvement we're our confident As from equipment, us to that for level XX% gains utilization speaking of you're rate availability the about forward. into allowing 'XX, but at and to it's feel to maintaining looking

Steven Ramsey

year. being lower then placing to for CapEx expected second then And that. with that maybe this half? Is or slowing XXXX? thought, to that gross line now follow-on delivery is year-to-date helpful. the Are orders that maybe Okay, a for continue you fleet in slower of And

Bradley Barber

both. the to That So was But quarter. our decrease of of handful XX% months, side manufacturers We quickly our hoped it's CapEx a did the guidance manufacturers heavily turned little achieve the fact, not -- of about in and level we specific into loaded a in in of weeks to for three back year. to the contributed QX.

into out So will then remainder was in of and QX a piece QX be that feathered QX. across and the

Steven Ramsey

Okay, placing for then you now helpful. orders And XXXX? are

Bradley Barber

slotting of well more orders current 'XX. visibility the already. And good feedback for manufacturers, -- we've for slotted right the We're got expected orders we based looks than now and from are. our off We the XX% of have XXXX

Operator

is Elliott from question with Stanley next The Instructions] Stifel. [Operator

Stanley Elliott

trajectory the and you or So change have expectations, here? on to back these should revised flexibility mean, right the just seemingly we're the right? on slotting, are Brad, pull that economy some from those your those not lines slots I along confirmed orders,

Bradley Barber

we pricing. We That's In not do further. take have do. it I'll confirmed correct, many cases, Stanley.

we're that understand potentially use that is to have And certain orders negotiate confirm to we'll may going And we We to pricing need. land. manufacturers orders. going then where our with more slotted those and actually

as work others, case. the to order are partners know It's take But and if it. shift always how think as it, then to with good we aware we operate. that's do I and and we are so. our obligation we in So intent you a always product to under how manufacturers should we to no on not business, decide And have see that's our react we to

Stanley Elliott

-- But of see carryover kind What we half 'XX? the the strong we'll you sort hypothetically, of rate base. I say just into let's exceptionally use in year. right don't. rental And What or Just of is the environment think a sort now. back starting and get that as would improvement kind of of tailwind

Bradley Barber

to Yes, rental to I'm going the rate John piece. respond let

John Engquist

Yes, sure, Stanley.

So really we the second rental out QX, With -- mid range. we than is in do the for to to thinking. lower a little were year, that the think sequential us year, started strength X.X% where we our quarter, it better that had that in sequential digits. potentially to can when performance, guided rate rates we this Then early of we mid-single range expectation the with X% an rate X% in gave improvement confidence our the to

when we'll QX. expect on QX in to sequential really, current X%. see. thinking at improvements range, going based in coming And end the That's the about I exit we're be We think do rate an that upper So year, the think that's rate X% out we for momentum. XXXX what and we're of potentially

Bradley Barber

comp. mind, me is in pretty a add, Keep Stanley, Yes. tough let QX

X% were up year of we 'XX. last sequentially QX in think I

continue that we're stated. going we to year. to But get we're So rates, John gain last to come up going start as when to momentum

Stanley Elliott

allow the and you trends you What certainly to to for last doing it structurally, get is a love be good evolved that that would nice some then guys since things you demand to me, tailwind have how some I get color the done hear how business Now possible. kind very that but maybe utilization you the has business improved seeing? to best commented help XXXX. on you're of And to utilization, are all

Bradley Barber

our a decades. set good we you, hard. that. I but continue processes heavily to a Yes. utilization providing highest. over of is and got will historically, all we've information, of level our to I that of market, people levels, our it's but systems accomplishment customers visibility, great bulked tell the team, without no previously always the working allow physical want small operate good on We're and proud at robust And Listen, of to we've consistently bar competitors ability to our developed, systems run We very demand, clear be us our north reported obviously, well. serve And certainly consistently lot that were them It's XX% taxing when utilization. to

Operator

showing further turn to session. I [Operator the Chastain for over Instructions] like closing any back no This questions. our Jeff to I'm concludes question-and-answer conference would remarks.

Jeff Chastain

you. with your again. you look thank today's the very taking Gary, close Equipment. on in today's We'll interest And forward today much your join to go appreciate assistance time then. you for Okay. H&E to and us call. and continued you ahead call speaking We for Good thank day, everyone. We Gary,

Operator

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

You may now disconnect.

H&E Equipment Services (HEES) 30 Jul 222022 Q2 Earnings call transcript