Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to H&E Equipment Services Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Today’s call is being recorded.

At this time, I would like to turn the call over to Mr. of President Vice Chastain, Investor Relations. Jeff ahead. go Please

Jeff Chastain

the interest to Thank all statements fourth of your our on your results at Welcome release earlier and A results. be you, good morning, participation found continued www.he-equipment.com. and call and and was a today's H&E quarter reporting supporting website H&E appreciate equipment. press review We everyone. in today and can issued XXXX full-year with along schedules

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

today Officer; Executive Officer; and me and John Operating Chief Brad Magee, Chief Officer Financial and Joining Barber, Leslie Corporate are Engquist, Chief Secretary. President

call slide him, proceed constitute believe, securities our forward-looking the will and expectations will forward-looking please laws. I'll you three, statements could, over of about anticipate to such as today's Brad discussion. within turn today's begin call expressions to if federal similar may, Statements expect, you But and words remind that before meaning contains statements. statements containing and the the beliefs I

the safe call contained company's reports. in slide in is Forward-looking any summary annual risks harbor known and those which XX-K and statement. uncertainties, cause forward-looking on results other included uncertainties in involve to company's risk statement periodic the today's materially the report contained of presentation from and includes these actual A factors differ for statements in could the described the risks and unknown Form in

on or after any forward-looking are publicly to cautioned statements not The carefully and these evaluating of call. investors place such the the revise factors update company statements. not listeners this to other does consider are statements to forward-looking undertake potential forward-looking date Investors, undue reliance urged and in

non-GAAP financial call. referencing are today's during measures we Also,

the GAAP -- press directly as will find in the measures, materials. presentation release to supporting to schedules our supplemental an comparable the disclosure required reconciliation these and and measure most for including You today's associated

unless are periods comparisons results noted, basis. for this discussed morning, on specifically presented continuing all operations the Finally, and a reported and

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

Brad Barber

morning, this appreciate Thank I fourth XXXX and H&E. of you, for thank full-year participation in We your financial continued you and our Jeff. review morning, results. quarter interest welcome to Good and your

trends Please business slide the proceed in for I XXXX, quarter, I Also this four. review to segment. financial metrics begin update in having performance year concluded with and support of an another on year to by robust a identify highlights of our activity outstanding including an will rental key that favorable followed want our business, expected should in drivers just of some strategic morning activity.

our with data be of your then review and follow segment fourth results, update XXXX, with capital our liquidity, in quarter fleet comprehensive financial I identify happy business a we capital coverage. of of our questions. and will an our will and and will growth summary strategic then a geographic which and our close also expansion achievements included record rental investment for will I address initiatives results strategic on to structure including Leslie XXXX. performance

future quarter important as results while of of we year, quarters implications please. of have reported all XXXX six, and fourth one on operations excellent with competitive record. Slide most The reaching We financial our terms in significant done productive was achievements positioning.

in the a equipment equipment year-over-year resulting to healthy of further fleet in the revenues. part resilient XX% in period, prevail supply remained revenues trends, factors due rental appreciation was performance financial throughout utilizations rate constrained. XX.X% than produced These favorable while in more industry total and improvement and which excellent a Our increase

financial period. Each at over levels. record improved measures EBITDA XX% the concluded addition, same of In these XXXX

transaction December in in on greater The review. allows effectively the throughout final of will sale in cycle. some which strategic margin distribution We pure-play for revenue gain This our our important the part quarter, the and the business transformation a included stability to completing ‘XX, explain recognized Komatsu sale, financial of business. as appreciation rental resulted our of a wins step also which earthmoving Leslie

of the acquisition One addition adding of our in the the drove of million locations scale. quarter, XX% fourth places the the following accomplishments advanced in XX extending include significantly new Source with Source count, at the accelerated program an branches, branch we combination branch in integration six which added year-over-year fleet additions success of bringing new in H&E total Further, following October in locations further XX. Other of XXXX Midwest. These of the two of acquisition equipment One number and in our our branch ‘XX, our expansion in now closing with $XXX new to increase operational OEC

million. Finally, continue a the year fleet expenditures in million $XXX.X in in quarter, gross we investment of to our $XXX.X for the rental invest with gross record of resulting

under concluded level want into results billion or greater just the quarter our now deeper OEC fourth I of at business. $X.X rental the XXXX. a record delve of quarter of Our than the to XX.X%

increase new which quarter, quarter. slide growth, rental of operations ahead branch fleet in to to of One program points the Strong or successful for $XXX a was rental with in year outcome to please. core XX.X% On led quarter expansion record seven, basis the resulted and of XXX revenue in gross million. the the Source margin The business combined fundamentals in a the a ago XX.X% addition our year-over-year

sequential which on remained XX.X% exclude quarterly Rental and rates when improving basis. quarter, the compared impressive, quarter fourth One to the X.X% in ‘XX Source, a of

for appreciation Each rate our XXXX. among remained rental industry. finishing than average measure better impressive, X.X% best the the equally year in was 'XX full-year of Our

used pricing dynamic improved in use the as locations capture application periods, is of branch future across due Smart now expected Rate methodology equipment in a each platform, XX Source synergies Our valuable all One well which in pricing to is to mix location. as

several healthy events results These points a pressure and XXX quarterly XXX basis contributed compared to a of despite winter rain XX%, quarter a from basis. geographic typical averaged conditions regions. including factors, to the fourth the basis measure decline the ago sequential in utilization when year seasonal Physical in on points, across and

dollar fourth XX.X% quarter utilization than in the was points basis better quarter XXXX. same in the or Finally, XXX

For points previous XXX strong better XX.X% than the or the and year, dollar largely basis improvement from mix, fleet the utilization including in demonstrating year, rental averaged management, rates benefits physical utilization. fleet higher

breakdown perspective Next, want to industry the give on our I a outlook. XXXX on

an addressing our our to the I industry reinforce opinions for trends of equipment. demand healthy Given favorable continue macro the economy diminished view to end markets not and divergent can of optimistic as important thoughts in the ‘XX, confirm has expectation leading

by drive slide regarding backlog fleet and the robust work to feedback customer construction a is Momentum eight, reported Customer encouraging is industrial backlog please. Dodge scope indicator which of On The the and year. AIA's Index. project over of expected associated reinforced contractors indicate to non-residential by future continues feedback building XXXX, utilization projections healthy in to The Index. Architectural and by builders measured non-residential as the activity Building

and results to from each of agendas, these has reflect for backlogs XXXX beyond. likely recent which they and high is well construction Although indicators project to bode continue non-residential historic planning declined robust active from readings,

extended demand increase complete. U.S. spending equipment renewable of in of in addition, Many capabilities and addressing manufacturing we will periods infrastructure, expect federal XXXX time these energy. be by to In require supplemented to an projects

should combination as ownership unfavorable and deliverability penetration delays new growth in rising conditions, customers interest equipment fiscal encourage of in tend from drive lingering shift equipment. by including rental demand of equipment certain to the Finally, rates for a away

We that Association compared Rental A is disclosed from points further basis believe improved XXX to to the recent XX.X%. American XXXX report penetration rental penetration likely. rental XXXX, in

catalysts expect in rate characterized projects total of an continuation modest attractive We utilization pricing environment Non-residential of our demand XXXX. by for and improvement. construction sequential increased these to industrial equipment accounted contribute XX% and the for rental to quarterly in revenues multiple result to healthy

initiatives, believe been in this in driving sound create opportunities while and customer our will success in initiatives investment instrumental fleet We and focused expansion geographic end and growth advantageously these of interest for of fundamentally further other continue greater of in to equipment the age mix has on growth attractive and in new positioned XXXX operational We for H&E. expansion. believe young company rental have remain fleet industry opportunities our our of our our our presence markets, the strong including

Slide please. nine,

I last two in industrial As growth. the expansion program H&E to for mentioned The regions our years. aim of geographic impressive key prospects earlier, successfully location new construction branch of and density added each in locations long-term we success footprint that to branch critical and a our component nonresidential increase our offer strategy XX was

success continued XX to of targeting indicative fewer with mindful add the Also, a million fleet this than existing we million opportunities XXXX $XXX to we with of for growth mix initiative, Being investment important growth. $XXX in many are impactful and XX identifying continue to as plan escalation locations the of as diversified expansion no stores our locations in and new with locations team's equipment. support young in branch both a XXXX of we a in fleet gross as

to of for expenditures The year rental our range another amounts gross fleet. record

to Although XXXX commitments, persistent in our original that gross volumes range supply understanding disruptions ‘XX, of we achievable to meet target the OEM chain. and a reduced despite will believe of certain in have production result their failure realistic due in more expenditure manufacturers target was the the

suitable continue plan targets opportunities comprehensive acquisition an our industry to in growth of remains attractive ongoing part ‘XX. an for our evaluation and in Finally, of appear

Coast markets with density Southeast, Slide states, Gulf across XX XXX new and and XX, Midwest, in opened please. including We Coast. West in branches greater the South XXXX the

close of of I gross produced our important industry's highest continuation and It a accomplishments out operational business, to rental exceptional Leslie, Before levels strategic These over fleet, utilization. pure-play transition to physical rate I rental performance in XXXX. has by of I will completion and importance the the of include call Source. best also is One in hand investment of reiterating rental our execution, point to believe the acquisition record the which our the program branch team's expansion numerous the

for a the company. represents significant each Individually, achievement

and our for to while However, wins escalating together, these strategic strategic taken posture. serve future competitive sound growth fortify base operations

to turn review a I'll performance. our on of XX, financial the and Now over to fourth Leslie? comprehensive for call slide Leslie quarter

Leslie Magee

Thank welcome, and everyone. Brad. you, morning, Good

million gain $XX.X $X.X million in recognized on the other The sale cash my first earlier Komatsu A with to earthmoving Industries, of distribution begin upon proceeds quarter, million. comments and LLC fourth of XX, property resulted of business. $XX.X gain sale equipment on as I the XXXX, million want on closed in review December I transaction or of quarter, a Payers gain $XX.X the our expand Before relating pretax and which WPI, net. a including [Indiscernible] to recorded as of Brad's was the

results XXXX were sale in the $XX.X adjusted arrangements in exit consistent of distribution. of as case third transaction sale for from branches all As quarter the not the the quarter on material distribution the company's Arkansas XXXX, of gain business the the two million involving remains with fourth

WPI For during of refer I transaction review. will the clarity, to sake the my

And of the where fourth fleet, $XX growing a or rental segment on that, rate quarter was begin improving business revenues rose year-over-year XX.X%, business, contribution by compared $XX.X when from and revenue with to basis. The XX.X% million experienced The or our One $XXX.X on Source. I'll performance slide XX. our morning excellent acquisition Fourth a this of totaled rental million led from strong support million quarter XXXX. improvement

OEC quarter included fourth compared acquisition in resulting of $XXX.X gross a of approximately fourth of by when net quarter as growth of XXXX. fleet One record million, original We five $XXX.X the of billion, the representing a from fleet The or equipment plus investment OEC to concluded million million, $XXX Source. the $X.X cost increase measured with a

better X.X% best of the year-over-year ahead fourth One XX.X% the improvements were and industry. results our third of excluding rate quarter XXXX. X.X% quarter, We XXXX Rental the rental with year in in quarter than closed Source, ago rates the of average among

result segments, $XX.X Average in impeding measure in fourth quarter year other to fourth the physical was the to sales the XXXX, modestly fleet in basis results. of was XXX business fourth million equipment used quarter million, compared with best in utilization ago $XX.X its improving Across quarter, the saw quarter in ordinary below XX% patterns XXXX. seasonal the

equipment. Higher this were sales has supplies. in of material and equipment handling below earthmoving historic platforms Activity run levels, lower aerial work sales largely segment due offset of by largely to tight

New to equipment same million XXXX. $XX.X compared $XX.X the in sales of quarter million to X.X% declined

compared million, in in Consolidated $XX.X fourth gross profit to $XXX.X or quarter. improved ago quarter million the to the million $XXX.X XX.X% year

of to used over improvement higher mix. With the margins sales period rental comparison. to favorable gross largely the revenue to margin XX.X%, and equipment, improvement, consolidated grew compared The the XX% due same a was XXX-basis along of point with

XXXX, year-ago with equipment the Total were XX.X%. to of year-ago to to used equipment Comparing the exclude margins, compared XX.X%, rental margins in rental XX.X%, quarter, fleet-only results were XX.X% were compared coming XX.X% to margins Used XX.X% trade-in, compared quarter XX.X%. margins to other quarter. the obtained compared in through equipment in which fourth at XX.X%,

Margins finished XX.X%. on on compared XX.X%. to the compared And new XX.X%, margins equipment finally, sales to to improved were XX.X%, parts XX.X%, sales service XX.X%, at while compared quarter margins

of mentioned million which the The with please. XX, due in sale operations the property, XX.X%, ago in Slide compared $XX.X to of improvement the the to transaction to margin XXXX totaling The gains the improved the from million, on $XX.X previously equipment million or in of year quarter of in XXXX. $XX.X quarter. and $XX.X Income to compared to fourth fourth XX.X% XX.X% plant was increased quarter quarter million fourth related WPI. million, to primarily $XX.X

In of favorable sales the improvement. contributed margins rentals, to gross and mix higher margin revenue addition, equipment used on revenues a

slide Let's the Net diluted the to totaled quarter. share ago million $XX.X to $X.XX proceed per XX. diluted compared or or in share, income million per fourth $XX.X $X.XX quarter year in

rate compared XX.X%, fourth tax XX.X% for to was in XXXX. quarter income in the same effective Our the quarter

in in compared slide to of the $XX.X to to quarter, quarter. in and fourth EBITDA year-ago a The in XX.X% EBITDA Proceed fourth to the increased million, in $XXX.X XX, XX.X% million XXXX. XX.X% fourth to revenue compared the of compared please. increase, quarter resulted an $XXX.X quarter in improvement XX.X% margin the million

as Our WPI fourth Of net. on an on of margins XXX result from and improved sales sale quarter pretax mix higher revenue. of to $XX.X transaction quarter rentals from a in million significance, equipment due the the decreased gains points PP&E the margin percentage the with basis our to margin, favorable recorded contributed used which revenues, SG&A, and and of benefited other a greater

Next slide XX, please.

quarter of employee or quarter salaries, to the SG&A, fourth fourth as totaled and $XX.X to increase XX%, Regarding million, was increase an as headcount. the The primarily XXXX. in expenses compared $XX.X wages well million of compensation, variable increased due

higher the expenses, and addition, increase. added facility fees quarter-over-quarter professional depreciation to In

the XX.X%, fourth expenses the related quarter the of which As million the basis new to compared of was quarter in quarter. SG&A the percentage added to with in another addition our the a year. XX.X% XX expense revenue, efforts, in branch branches attributable One year Approximately to to $X.X declined prior of million points expansion XX increased Source $X.X over

non-cash Slide XX. million. year fleet the Capital from gross total (ph) net the in were expenditures million. million, in with expenditures for rental in totaling $XXX.X the $XXX.X quarter the investment fourth rental year quarter capital totaled inventory, [$XXX.X] $XXX.X of capital fleet for fourth million, transfers including a expenditures resulting Net

fourth the Gross million. PP&E were for $XX.X capital expenditures quarter

ago of with XX, our the transaction year XX.X we fleet, PP&E fleet And December the in the fleet increase, continue compared the proceeds followed and to to quarter the Following our which to of months WPI, net months. One average in XX.X compare of of XX.X Despite of XXXX. favorably to Source $X.X as fleet recorded the the third acquisition XXXX, million. XX.X age months, age industry age increased months average quarter

XXXX the was flow Net million cash and by cash $XXX and acquisitions. company's for operating respectively, in on $XXX expansion the quarter new free activities full-year fourth $XXX.X locations and fourth fleet growth branch provided the and year quarter million, in totaled of $XXX.X used and the through million and demonstrating million focus

XX. Slide

XXXX a the XXXX equipment compared size dollar As Average the cost than billion in year prior XX.X% million of based and increase quarter. close XX.X% for level $XXX.X closed $X.X of of approximately fleet larger rental on quarter at or to H&E. fleet record size utilization I fourth noted at XX.X%, our in our XXXX original improved an earlier, the to

was acquisition XXXX. decline to was from in ago unchanged move the to a cash essentially XX, $X.X continued fleet. following December December XXXX, was Source million slide the One XX, cash to at The compared year quarter please. Net XX, debt times, the the Let's increase Net fourth and approximately equivalents our at leverage billion, quarter. $XXX.X of investment X.X in due and in rental

billion before on $X.XX We senior our XXXX unsecured have no notes. of maturities

Slide XX, please.

totaled amended cash to Our billion including million XXXX, million, XX, our XX, liquidity at XXXX. of availability ABL the at compared December facility and approximately approximately December a billion position Excess ABL $XX.X $X.X XX, $XXX.X to $XXX.X facility improved December under million. balance at borrowing of $X.X availability under

applicable. increase with is with the Also, recently $X.X availability the minimum to to fixed charge springing have investment ABL excess excess determine The in of we extension concerns. is definition, $XXX of our measure million By by reflects And no defined ABL extended facility the as the $XX in credit our availability years if billion, availability remains our availability covenant and our million. agreement an facility used to continued XXXX. our completed continue we five February fleet

of of our per quarter our to it XXXX. subject paid approval, intent are Board common in the stock to regular dividends the of we quarterly dividend dividend. while share to is continue Finally, $X.XXX fourth pay And

XX. year. greater our new Slide as performance revenues, gross a shift total rental margin led dynamic with transition together of This a a of rental to many in records successful reached XXXX influential categories level the business improvement. catalyst They and in gross movements revenues, rental the highly margin. environment achieve as included intensity H&E over for total summary, to timely served financial In

fleet contributors increase growth. to count record margin branch together our at EBITDA were record basis than closing accomplishments of duration year investment and XX% significant remarkable year XXXX. better a points EBITDA These XX% XXX surpassed level, And in in a or addition, billion financial with the an the of $X.X

by a maturities including our X and of at resources will be times XXXX, to we capital at for senior $XXX range times. XXXX, the and targets our no supported ratio approximately end established initiatives position of conservative our of remains X.X Also, strategic times, X note low growth have ample liquidity a new guidance With until unsecured structure, million. leverage

from to our enter is build we believe prepared foundation successes as are We and XXXX, in XXXX. in place we superior operational

we begin ready to operator, Q&A our that, period. With are

Operator

the begin Wells Weber ahead. go question will We [Operator first from Instructions] Our with now Seth question-and-answer Fargo Please Securities. is session.

Seth Weber

Thanks for morning. Good guys. I Brad. Hey, taking question. maybe the guess for

gross been be rental does branch should incremental through just year that Just Thanks. that headwind create we new should rental we the and the targets doing or incremental margin rental guidance how your you've openings. about trying the Is Or to acquisitions think margin? of lens in how near-term for the a about that thinking full thinking -- be on business?

Brad Barber

period Seth. first accounting the the warm course, add. Leslie with assumption Between morning, have have your the is of time associated Good correct. where that may additional with for some of of part starts. a I'll then, And Source. But the depreciation purchase take One something to fleet we

While very we're happy.

all years them takes them a But but of ramp up course, while as I exceptionally for Our -- opened are and that mean are value we greater actually group to last well. categories, to had the of planned solid warm performing several drag. starts, different a a to. EBITDA we're it two they than in XX dragging generating we've the they're they're adding levels group

a we're happy, they So yes, headwind. but are

helps would pertains something incremental out? to that it you Leslie, margin, the As have

Leslie Magee

Seth. morning, good Sure,

resulting will, Brad fair impacted pain gross as rental value One to other markup to the our So Source. keep from depreciation continue few of things by fleet higher the of stated, flow-through mind. through in A margin be

also of into of want from color. or may assumption. playing utilization seasonality flow-through periods XXXX that XXXX normal continuing expect of levels John seasonality little probably will fair But a to following really gross expectation year the and some rates at the a rates rental margin is add Brad not was We And perspective. include

Seth Weber

weighted. is Or a years a the more Right, cadence, CapEx feel quarter okay. that we cadence follow-up the to that. for be a do you kind across of just Leslie, of -- you Last guidance. traditional like think XXXX again? bringing year Thank just kind assume going is more all but traditional you And cadence maybe second, out in then it's spread fleet? couple have Is should of, third of over the been map, do on

Leslie Magee

we normal now, of are more at year. looking a cadence I As throughout Seth, of think the

Brad Barber

mentioned XX% you benchmark want our again. pleased execution mentioned, is think we're and the go was outlook rate very this And year-over-year, want solid year, Seth, the XX% fantastic. as We last exceptionally to positive. improvement respond. because with -- clear I But I not be back really Leslie outpaced far additionally to our to Yes, for produce expecting We group. We're year. house here,

smart sales getting continued improve. Our excellent rates by supported our The why use fleet to is of and mix fully we're that's has outcomes. force, these

comfortable we're what continue sequential with incremental to going rates really is said, that being forward. performance in we're to get That going

won't We're So the we're to going at it. just but not improvement I have It or rate the on won't we be same giving up record think levels. common. less setting rate improvement have

Seth Weber

Understood again. it. guys. Thanks Yes. appreciate I

Brad Barber

you. Thank

Operator

from Steven is with Thompson ahead. next Research Please Group. go question The Ramsey

Steven Ramsey

is Wanted percentage morning. XXXX, your of factor look in rental a of clearly, this first to story much on results? rental a How revenue. good mega this in and projects, magnitude even of non-rev you a Hi, And big order companies. at sizable as this recent is for ask

Brad Barber

wouldn't nominal, Sure. mega looking it's results area active governmental you're projects, country. Good company in got show up. of infrastructure we've we have at, infrastructure, and existing into currently more Central. the being divisions: That In three our said, broken morning, project And it specifically, Steven. our so West supported East, each

So speak, we're on got as project see to equipment so work. We've we starting it's emerging. that

forward. material I additional it that it's to accelerate going become move opportunity the year I it, of on to piece but we're going think very it's going meaningful becomes, and guidance give we're how ready further only encouraged know a as don't we market throughout to and

we we the for and year So call projects get it's these rest positive We're to of on on for this see it's will that sure. more projects, time a be every existing on today.

Steven Ramsey

or on is market in to this a this? you just shift this Do operationally added of an to fully And take helpful. strategically topic. to Or with way operations quick opportunity? need advantage any add That's normal

Brad Barber

there that and shift. When maybe opportunities. as important much are $XX or starting say billion I sales to with advance strategic wait efforts No, measured is you're no with participate. as dealing $XX in billion, our too of well billion you the would is what's $X don't late projects

So making we're that approach right fleet at time in we the way is have. the But our right strategic operationally, same execute we sure always the effort. we with management force strategy. with and It's sales just associated

Steven Ramsey

gross and And your great. about be the much now How thinking your then coming for great regions Coast Gulf with the the Okay, Southeast long-term. of place half clearly to profits want from and of other do that expanding this? just in any openings geographies, Or with would you prefer grow branches? branch maybe thoughts geography to in there? So more fleet you some reflect your in a

Brad Barber

short course, The answer is, both. of

we the arguably in One region, sustainability XX% where not and roughly six That putting gross Midwest. been our the will as Southeast of the country have markets Source of in be hottest our continue tremendous expand to said, and greater to by and I at evidenced excitement our new with for reach opportunity some we are the us think being arrive part the by we growth. like deterred density of density, has margin, We likely

or assemble we're us we're happy But facilities. to to look the available we the the going look We're we're a going to to look footprint. spread other, see If going one robustness little density we with And drive that's going both. And of the at what's pick at and going so to increase can to at further. had you're our either a to us marketplace. coin or bit team then do to toss and out

You'll see filling expanding well as it it. us out as

Steven Ramsey

one term? this then SG&A prepared longer the as revenue. a leverage SG&A or performance XXXX fourth good And in quick the leverage may in Can have quarter about I last revenue comments. Great. for against the and strong and of On me, in talk rental you total percentage leverage, missed

Brad Barber

I'll Leslie to let that. respond

Leslie Magee

Sure.

warm-start think as now So XX.X% for this considering a the finished full-year revenues. assumption into of just XXXX a I XXXX. our moving fair we reminder, And is at strategy,

Steven Ramsey

you. Thank Great.

Operator

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

Steven Fisher

morning. Hi, thanks. Good

to but follow-up maybe improvement. potential sense sequential rate wanted rates. I year-over-year? you just give you how you us the the a mind for thinking know mid-single-digit Can Does that on quarterly you Just your I XX%, said of that as wouldn't mentioned translates kind modest range. do how guess right about Brad, sound well? you in Or have targeted that? others about are another of

Brad Barber

these gains does What's right, mid-single-digits. continue sound know Steve, We've unfolds. the the to going interesting, we're as It about certain to momentum into very we year to be We feel going get year. incremental quarter-to-quarter-to-quarter. got coming

X% So is our view mid-single yes, currently to more in think I the but X% digits. range,

Steven Fisher

measure? continue to just report Okay. you going And Source are X that to One a combined or will that be of sort

Brad Barber

against. reporting me We One supply data ago do to at an measure. to assumptive data, going measure One have adequately have year placeholder Source to reason Source would let had to to the would are the a or did placeholder we're tell is us X allowed you and We the a route have have not --

the we opportunity report that So and want One say additionally for with we lot we're seeing source going of not I'd to Source. a XX first were that rate for improvement, already. months, there's

John, do with we're currently. add some of smart you Source with seeing what to want to rates One

John Engquist

Yes.

expect We was have we system, we already Source pricing seeing And when XXXX. platform we a that for we the got we've was now. onto synergies. synergies on continue, expect lot solid we're and One at active one month-over-month our that the them now our them increases. -- looked And sequential obviously, did big to of So that

all So there. positive

Steven Fisher

you Do of Source will utilization? on great. That's utilization [Multiple well? improve One And to how the And about what Speakers] impact opportunities see there that as

John Engquist

Yes, that we make at improvements see levels we going to the to with the not the that's running that are with as but those the only we're year. we do. utilization, we're currently. And They're focused an mix, fleet But same not continue throughout again, on. opportunity, that do, and we something

later progress the So we in year. look reporting that forward on to

Brad Barber

Yes, Steven. is measure just in because And that overall our a in physical company we time. their performance at obviously, utilization point reflect

And So pleased with that so where there. are we know progress we're stated, opportunity, that's we with our just another team as and John very far.

Steven Fisher

Great. a the across about And demand on just lastly, the and projects regions. strength there's lot of the mega and call discussion been the of

through. demand I'm what So see various How sense of interest parts variations is as rates a of in do you point. I if into Or us construction market you do all? sense some coming it at mixed do not the kind this kind can guess, of curious business messages you of give you from your there We see filter variation? that filtering non-residential see at

Brad Barber

some related be quarters just We opportunities same states I've similar cover. the or pauses. we're today projects, as XX two not front ago did seen whether are to mean where it a areas the isolated than the of more to reporting. fuel as be to up quarter we with about some And of better I be additional we just referring us they as going I've we strong for be seen think or geography think much. the you little see don't some these happen are in holding I may our And mega I fire. reporting of a in We feel in or stimulus high-growth,

Steven Fisher

Thanks Terrific. very much.

Brad Barber

Thank you.

Operator

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

Brian Brophy

in the quarter. more And about a Congrats on This color much on little morning. you more you're hoping Brophy I a could quarter? bit contributed how of talk actions the little rates. Brian smart that what's good us bit some for rate Give the your sense on the for growth Hi, there? was to fourth is taking Stanley.

Brad Barber

customers greater points of of as our don't on many about data. market-related any We division region we data or talk within size as we going within profile how branch, and company. we these proprietary We've customer in it since perfect again, detail Rate to and developed that's years dynamic we what's And a both Well, as move program existing points, is our five six forward. it continue at point, we well use this weight proprietary, our variables. to -- of or it districts a real-time, probably uses course, it's other data Smart with variety

But the us and use over is force, our has tell information motivated what of give QX at better power I professional is QX. of what you transpired sales understanding increase point than being it combination can the this a to the to of XX% need

the believe as well. we outpaced data outpace then And competitors, us the that as I to so I larger we lets in far have improvement. I maybe year margin last all nice So we believe far first the earlier a Rouse with rate also, -- we outpace benchmark question, benchmark by access mentioned, of our competitors

focused there, to be anything achieving a not there's So marketplace competitive. of in that or out have just any that there It's and on our the should we going are greater we in moderating interpreted marketplace less that is view way of rates. be

going And more see -- you'll forward. incremental so to we're gains going

Brian Brophy

we point Thanks. start Yes, do historically And it. do you gross trend to helpful. mid-XX-ish of then Got How going XXXX? think normalize you margins that sustainable think used strong Or up? you. that's Thank put quite on year. to that type margins, some equipment this guys you at have obviously, used back past into is

John Engquist

take I'll Yes, one. that Brian,

peaked be going would to to us for late that markets seeing, not is XX% continue we the see ourselves the We surprised back pricing margins mid-XX gross range. used I last from used out So mean, we But what year. strong. in margin used with on the know continued don't pricing see strength. we're sales on today, I

can healthy level. of So market used we for again, the achieve the confident we expect a balance and equipment that year

Brian Brophy

that's really think helpful. from us through we you about And impact that distribution help can flowing Komatsu the How should XXXX? Got Thanks, sale? with the it. then modeling

Leslie Magee

the more accounted a The biggest a that that for half than sold our little out we business would -- was point Komatsu is equipment more little than say sales. to thing I of XX% new

So new. our we business definitely and expect rate sold as service of the well bulk to keep not into that were related that And to Komatsu account. parts sale, then as at the the would the because revenue same decline

Brian Brophy

pass on. Thank helpful. very you. I’ll it That’s

Operator

[Operator next Rygiel ahead. Alex B. Instructions] The Riley. is Please question with from go

Alex Rygiel

you've past, was fleet stated if that Thank the would available. more your In spend think you. on the I you rental equipment

how at my about is, chain of XXXX? for we so, outlook has global the through sort think So the the supply for chain And all? supply should I guess if here question non-improved

Brad Barber

that enough the believe about improved an don't I Alex, supply morning, has Good Yes. improvement. chain to talk

understand in equipment their a they're year our in real has a this we much where disruption year our and we environment what still out we improved existing forecast. for manufacturers than there's are than could there. a planning ago. the same in a the There's take position availability, more and currently think is no, are is still planning of time was more still I crisp it lack But

I this this is going on mean, rental utilization bright basis. will improvement solid to So in continues on a just supply demand the imbalance look, the emphasize that the it and incremental sequential gives forward let rates confidence it us and side up. of

Alex Rygiel

as time? and relates company of was Do visibility below to better for have it I when any it be it think reach would secondly, might Source, averages? company you on And that One that utilization averages some expected of kind kind

John Engquist

you back Yes. locations year, Midwest, we is would typically half I which the at what most than other Source -- look the where would in markets. a of some of the see in there the say One bigger the factor are, are seasonality in

we get into could start later say I it out those XX-month happen quarter, into but a see -- look, little third the focused we would a it, are and we there's be the level or So closer know should on this sooner, could get project to as But we averages. opportunity that to bit to and an improve. company year

Brad Barber

Yes. And gains getting positive we're already.

group by at there, think will utilization John's if second performing year-end, company levels comments not that I sooner. be So I

Alex Rygiel

Very very helpful. you Thank much.

Brad Barber

you. Thank

Operator

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

Jeff Chastain

conclude taking day, interest assistance, soon. Thanks, with good the the in Okay. everyone. We for call. everyone you ahead for to speaking today's and continued thanks appreciate go forward again We and join the and again look company. Gary, and today us Gary, to your time

Operator

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

You may now disconnect.

H&E Equipment Services (HEES) 22 Feb 232022 Q4 Earnings call transcript