Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to H&E Equipment Services First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, 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

good H&E and Welcome our to Thank Services morning, first of Equipment quarter review you, everyone. XXXX results.

morning Your appreciated. this and in interest participation H&E continued is

and results A reporting at the all was can www.he-equipment.com. schedules be website, issued supporting press statement found, our earlier release HME with along today

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

senior Officer; our team, this Engquist, Officer morning Magee, by Barber, X, Executive including Chief Secretary. Slide I'm Chief of Brad please. joined President members and and Financial management Officer; John Corporate Chief and Operating Leslie

within Slide begin to you that X the expect, call, today's federal the statements about may, will and I expectations today's call laws. call will contains such and him be statements call forward-looking over I our forward-looking anticipate could, turning constitute other to beliefs and Statements as Brad meaning containing expressions after statements. remind and attention words the and believe, your securities of similar

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

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

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

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

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

Brad Barber

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

performance Also, contribution pricing Our branch provide was fleet strong XXXX. XXXX, gains already in our quarter our first a encouraging, our support demonstrating and with robust performance. from further achieved shown expansion year-over-year growth to exceptional very progress in strong

Please today a in proceed review metrics I some financial the performance. shift Slide to the quarter rental X. before I'll an to with begin brief discussion of key our update of

XXXX. the confident rental Next, I'll we share while thoughts and my business prospects the equipment on for remain in

and an branch including I'll fleet be review we'll strategic update quarter with the take a first update follow our and then on objectives, structure on expansion you Finally, and in and provide first liquidity, growth capital segment business to Leslie your performance of data, including our goals questions. our happy quarter. financials, achievements will

low-margin our by lower The was largely responsible distribution for X, please. components service and business to first segments strong sales sales Compared from and rental of sales Source fleet were improvement three the lower a exposure revenues. branch the significant continuation were revenues our growth. Excellent December last all fundamentally these degree, part to to partially addition business. quarter growth, primarily One Improvement a than factors to the offset XXXX, in environment Slide were and, revenues. rates, divestiture of quarter total business of the expansion, of XX% XXXX first new better of these the lesser equipment due the

in excluding new were ago utilization fiscal the the or the $XXX quarter first growth to first an XX.X% we from cost, fleet our first rental up quarter One in year-over-year moment. in with OEC, a the despite quarter fleet the year million first from details in year. carrying provide up rate with on compared equipment quarter year-over-year experienced Source, rental in as increased or first captured revenues of improvement XXXX. quarter, expected strong decline XXXX rental original Also, achievement our utilization. when the fleet quarter rapid exceptional XX.X% I'll Equipment our rate additional into X.X% Rates OEC

in Additionally, The of operating This from to branch for branch branch accelerated our growth program in increase XX XX we consolidation. and the year adjustment XXXX a the of of network. more ago, through first benefited our achieved was recent growth the One acquisition branches quarter Source. compared an record reflects followed which our expansion -- XXXX branch

as of a increase during Leslie the strategy. meaningful financial will management fleet our point Finally, in cover this others review. part experienced used our equipment quarter sales and

in factors an same million drove EBITDA, which was $XXX.X margin while XXX up points quarter, the XXXX. the ahead totaled in XX.X%, a of same These strong EBITDA basis of first quarter increase XX.X% year-over-year

impressive business. now rental X, compared quarter an our will I some from cover XX% to margins gross million. $XXX.X revenues ago to Slide highlights Rental improved please. the year Rental when the XX.X% the XX.X% were for the decline. depreciation, her will this cause the comparison explain higher during further discussion. of quarter financial with to same Leslie over period for compared primary

earlier on we the quarter in the rates impact continue positive to across pricing equipment demonstrate industry. relative as rental I rental the performance excellent noted

up improvement, sequential year-over-year excluding In a basis. rates, rental to on One quarterly were addition X.X% the X.X% Source,

quarterly improvement sequentially unchanged. Our in remains expectation for rate XXXX modest

with expectations, XXX-basis-point was disruptive quarter quarter persistent in our several typical due largely of to geographic regions. a of year with measure. compared first decline fleet line ago across weather was to quarter utilization first the our XX.X% The Consistent

utilization first improvement to include rental ability strong XXXX. dollar XXX-basis-point result, demonstrated XXXX, of other first These success. favorable compared factors the fleet excellence. success Finally, fleet management, discipline, and branch has which late factors areas expansion highlights for quarter growth operational the critical address our of since was a effectively XX.X%, This continued and rate effective in improvement when quarter to

resilient sounds also persist a we We will that environment, XXXX. business benefited from conditions confident and remain fundamental in

X, contributing end of the robust especially the our revenues These segments. market markets end remained industrial behind facts some Slide XX to want positive please. activity to On our backlogs, non-residential provide industry and over in accounted to XX% months. strong, important for thesis. I Construction last two the Next,

witnessing an across planning various to non-residential are abundance several industry a continue and outlook. and of operating We construction projects key activity positive our stages future support footprint execution of measures entering of

certain Although peak measures recent healthy months, they have softened from of throughout signal balance XXXX. levels to and continue the into in activity XXXX

the are Also, are the operating facilities terminals in a the and construction U.S.; central Gulf across electric include, and all battery factories large and Central the along Coast, not of chip LNG solar variety and -- vehicle our Western chip addressing federally-funded data programs private footprint. plants farms and export impaired These building infrastructure but projects manufacturing regions and of east, to, across western increasingly regions. centers limited fabrication projects in country;

Our participation in extensive year. these expected opportunities is increase throughout to the

penetration imbalance the that outlook. in equipment further favorable rental represent a Lastly, a of supply reinforce positive industry likelihood and improvement continued dynamics

at of important On approaches the as latter point, highs. measure its rental this exceeded pre-pandemic penetration the is have conclusion estimated XXXX XX% to

proceeds. higher of favorable modest are rate These rental sources numerous fleet the including customer as support improvements sequential demand physical year expected business and utilization to conditions,

our towards to Finally, components our XXXX. and opportunistic Significant our provide Leslie, network and I'll rental progress the turn continued strategy before on improvement please. update growth over of M&A X, call remain strategy. of in our fleet, growth principal expansion in Slide I and expansion branch an

in optimal an quarter attractively the year the to approximately capital expected This our million. fleet for Our gross remaining outlay demand escalating address sizable first million expenditure $XXX with the strategy. first expenditure new have the positions in needed customer expansion full totaled while million, $XXX seamlessly with $XXX quarter equipment location branches as begins to to existing construction execute mix fleet required activity the ensuring we our seasonal

of less regions. possibly reported as focused density key than XX locations, in as goal greater our Regarding many remains and new unchanged. no in on geographic We XXXX new previously XX remain locations

quarter. new were added first No in the branches

we open new second many as quarter. branches However, expect to during the as currently six

we XX, integration The total from Slide reduction our the across We in year-end closed Source modest branch as quarter branches the our finalized with please. branches of states. first process. XX consolidation XXXX One reflects the XXX

superior summary, successful first quarter, result. the quarterly rental another line substantial for fleet story of branch combination the meaningful In growth, execution describes expansion discipline, to leading the operational fleet effective and rate management, concisely

With strategic growth our the other we factors, improvement expect financial further advance critical XXXX these demonstrate continued to we and and on operational objectives. fully while focus achievement in

on Now extensive turn an and I'm XX, going of review financial the performance. to to quarter Leslie to Slide call for first Leslie? our over

Leslie Magee

on review morning Thank you, profit margins. and with a gross profit of I'll welcome, Slide this everyone. morning, XX Brad. and begin Good revenues,

$XXX.X and sales. revenues than XX.X% quarter or XXXX. was in equipment First due of million $XX rental improvement totaled The quarter first the used revenues primarily higher to million both better

Growth year rates meaningfully up were quarter million At segment million in the fleet in to the appreciation $XXX.X the contributed and the level, quarter. compared our in rental in $XXX.X revenues rental rental improvement. to business XX% to ago

As earlier, XXXX, rental rates rental Brad to million higher to quarter the or we our grew first fleet quarter $XXX.X of achievement when and X.X% a first quarter with XX.X% first excellent first recorded the Unlike X.X% demonstrate of basis. of compared rate of noted continue XXXX on year quarter the typical XX.X% a XXXX utilization better XX.X%, more outcome. of we reflected utilization fleet and quarterly physical ago sequential when quarter, than

together year resulted The $XX.X equipment million execution our compared XX.X% equipment, used quarter. the sales rose management in in to in sales to for strategy, the of to a on our increased with decision capitalize strong from used quarter fleet Revenues $XX.X the million in ago market quarter.

decline earthmoving primarily in planned in a representing to the $X.X from in of earthmoving Komatsu the million to sale to our activities. XXXX, distribution distribution sales $XX December a XX% declined in equipment our The as due And of equipment. million was business, quarter final reduction sold in a first exit we reminder, quarter New step the XXXX. compared

$XXX.X profit first ago million year in $XXX.X in to million gross the $XX.X increased XX.X% quarter. compared to Consolidated the or million quarter

equipment comparison. compared improved Our improved gross An same margins over contributors the primary of mix to to consolidated were the margin improvement. higher used to the and revenue period on XX% XX.X% sales gross

in compared ago XX.X% year rental margins equipment of to first quarter the Total quarter. were in the XXXX XX.X%

trade-in, sales Margins compared equipment to of compared XX.X%. with Comparing quarter, margins One XX.X% compared compared rental at service margins the to Source. The improved And XX.X% market used compared finally, Used from to new XX.X% lower XX.X%. obtained margins fleet higher XX.X%. equipment margins to value on through results from to margins compared resulted exclude quarter to margins, fleet-only on were XX.X%. at ago XX.X%, acquired equipment recently to the were expense while year which XX.X%, sales the to other increased depreciation XX.X% finished fair on XX.X% to XX% parts

year XX.X% of million Income The in $XX.X margin XX, the XX.X% to quarter $XX.X compared the as and of and Slide resulted XX.X% ago quarter at the higher offset compared partially Favorable million rental SG&A to XXXX. costs. the previously equipment by quarter. please. which was on first in gross contributed higher used in margins margin, mix from sales increase operations margins to closed first a revenue improved lower discussed

quarter or $X.XX million Proceed $X.XX in share to income XX.X% per diluted million diluted to please. Slide the year $XX.X per $XX.X quarter. increased or XX, ago Net in compared to the first share

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

Slide please. to Proceed XX,

used year EBITDA quarter $XXX.X a quarter first total $XXX.X million and the higher SG&A was an revenue. compared mix XX.X%. in the the partially XX.X% improved EBITDA XX.X% ago expense. sales. XXX gross favorable to These an equipment to again increase factors in improvement increase First compared by to quarter outcome The totaled in improved points result and basis on million margin were in revenue margins offset of

well headcount. XX.X% SG&A was to quarter-over-quarter first in The added employees, to please. primarily the and and million Higher fees increase. the XX, professional million facility result ago $XX.X $XX.X expense in or increased salaries, compensation quarter The variable as increased increase Slide year wages compared Next, million. quarter. the to expenses due $XX.X to as

since SG&A percentage in $X.X XX.X% in strategy a branches, the new the branches X expense as year prior revenues, the over to Expressed Source we was of in Approximately the of year quarter. expenses were opened the compared quarter. XX.X% quarter the attributable prior this acquisition. period, to of in the close expansion million branch our first quarter And One acquired increase excluding

million of of totaled million. total sales quarter expenditures expenditures $XX from were quarter transfers million, rental XX, please. $XX.X PP&E. net expenditures capital or Net inclusive Slide PP&E capital first in Gross in Gross million. fleet inventory capital fleet $XX.X $XXX.X the were the non-cash of

industry million used quarter cash compared Net to was cash flow operating period the totaled age $XX.X was by flow months. at million in age $XX.X in quarter. Free XX, our months to over the March comparison. provided million to fleet activities year compared fleet million ago average and rental $X.X quarter the free the $XX.X of in favorably the compared and XX.X XXXX of cash same XX.X The of of average

Slide XX, please.

of equipment size fleet $X.X rental size on fleet or million quarter XXXX the $XXX.X conclusion exceeded larger cost based Our at XX, approximately XX.X%, original billion than the was at March of the prior in of compared improvement mix. the our and XXXX first first to XXXX. quarter quarter, Average to utilization the to XX.X% with dollar in and due rental rate improvement fleet XX.X% year largely improved

up XX, at compared December XX, first Slide XXXX the to when compared with XX, $X.X net on was XXXX. -- We X.Xx please. X.Xx Net the quarter XX, billion, Moving measure concluded March essentially at at debt to to measure a approximately or unchanged leverage December XXXX.

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

please. XX, Slide

March cash our from $XXX.X balance Our $XX.X and including liquidity ABL under million, amended of the XXXX. billion position $XXX.X December on million a under availability totaled $X.X measure availability ABL facility million. at facility Excess XX, XX, was the unchanged of of approximately borrowing XXXX,

charge agreement the continue of and concerns. as by $X.X availability measurement fixed the have excess million, note determine with availability And excess coverage that Our if our ABL used to remains is covenant to availability applicable. we billion, defined is no minimum $XX springing

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

Slide please. we start are conclude, encouraged the by to strong To XX, XXXX.

We've of improvement, greater record through and operations, performance expansion to from of actions a and financial rental stability we rate given performance interest significance disciplined and a Many system strong and pressures, conditions financial business key now demonstrates strategy, cycle. prevailing successful the metrics Our rate sound position growth benefit the banking objectives. continued recent year-over-year instability. inflationary scrutinized financial

strong initiatives are XXXX. fundamentally-sound emerging for by project favorable place XXXX and in extended EBITDA conservative remains environment by opportunities. senior recently maturities and a We respectively. excellent credit resources capital at supported into a leverage We facility our These environment financial stands until And have senior coverage net and of is execution interest X.Xx secured believe we The no our initiatives. backlog and structure. our and XXXX, the supported growth X.Xx, ratio ratio our

H&E, apprised to interest you of Thank and our in you forward for progress. your we look keeping

ready begin Q&A now the to are We period.

Operator

begin is Thompson will first question-and-answer [Operator We now session. Please the Our Group. ahead. Instructions] Research question with from Steven go Ramsey

Steven Ramsey

in than the maybe follow-on your then than projects in a And or like or guess, a quarter? of Hi, environment the as out through bullish Seems still there as feedback, still. normal Are think they good they there times? maybe are how customers, pipeline to change did it morning. year? you strong The in if multiyear I customer that. first more entering with timeframes the were projects year hand about ago a

Brad Barber

Yes, one is around feedback to It work feel changed very really employees good remains consistent morning, ability of the from Steven. Customer front them. in customers enough bit. to sentiment strong. The their that's has do not

no strong, their point at inflection in we've time. this remains So backlog and point there's that witnessed

in think of front months ago. than multiyear The multiyear. sorry. the sorry, don't -- More second I me today more of your more have they I of projects There ground. question, remind projects broken projects, see were doubt. at are a part of some here, it there's XX these us -- I'm Many yes.

this and Some to last and are 'XX. into quarter, late start broke scheduled QX more QX, year, here ground many

as ago. of there today was we are more So projects than here sit year I in There think a front us certainly multiyear it's quantifiable.

Steven Ramsey

prior the views if $XXX how you then cause And quarter deliveries is this for revenue your million, your to of year? this received the rental the XXXX And Helpful. first in increase your did Okay. to does ahead compare it fleet original of deliveries? views, you expectations of

Brad Barber

very on we've this pleased planning planning were be it's manufacturers internally. capital expected. what as placed for time that the for and going year with appears It's of within we We're the range that to

seen encouraged that plans very expectations. by with in we're by QX availability, aligning we're QX. what seeing and We're our encouraged in meaning very it's we've with what So

our So rent. yes go going get to we quicker quicker on do? revenues -- this I it's mean, fleet, what The will the

course, As we've we've opened prepared probably the I we're their XX previously a spoken with think mentioned we locations and, six -- comments, this about last in One that got my we've year over years on of nine opened the slate locations. of locations two the Source heels

Now finalized that that integration. one we've had consolidation and

where CapEx. So we our with with very happy are

Steven Ramsey

think this a one of then On I year. you've And to Helpful. more percentage for last flattish me. talked as SG&A relative sales, about year Okay.

major levels are And for the revenue that growth the revenue contribute strong getting factors rates not expect SG&A and rental getting helping what to on year? Given you the do start there, at this leverage what leverage line?

Brad Barber

to Let commentary October that XX% year. it's growth think, this mean, to this stated in posting unit locations around we're showing why per rapid Source year than some I our as really continuing and year. new we're we XX the of leverage, better we're me build give purchased, that growth. to are not more last I XX One out expectations I've

that's we're the you to. leverage be referring not So why may seeing

that for balance location to years guidance, a nice comfortable come. are fleet could As were for that. markets going come. growth primary focused flattish-type many accomplish to we decades with to If we all far on to that count we're moving I unit more will job think we're H&E markets that. substantial many, reducing that's as The serve But and we're us serve SG&A, of doing

that? to anything add Leslie, would you

Leslie Magee

the would our to Brad is which I expectation be think XXXX, for concur that still year. we'll mean, flat that answered was I XX.X% No, full it I just perfectly.

Steven Ramsey

Very you. Thank helpful.

Brad Barber

Thank you.

Operator

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

Seth Weber

morning. factor sentiment, a follow wanted what side? like projects anything projects? with for the sentiment good on So maybe center heard is forward? anything Or financing -- guys, what couple locally a banks of any guess, there. up the is in money going or versus for governing potentially start customer maybe Steven's -- Hey, area your stuff anything having have to trying many that tie challenges percentage The you I positive financing financed hearing have just guess, And you of I that -- banks? getting are together on to you are the I But how bigger just I'm -- about questions. sense on customers do good. a to

Brad Barber

Seth, due more are good specifically our focus No, have projects current I've morning to engagement may with not and and not on in spoke logical mean asked for not. zero to -- go projects, so But to feedback I we banks and impact who we received question we the you. with spoke about same and financing to we've in. seen customers regional or very I've obvious any gotten investors, far. our not reasons. environment we're the that others

paying question zero been aware, But there change. we're we're is to has answer So no, attention. the your

Seth Weber

have just, back think thumb if the That's lower Brad, -- like so should then about a less Are impact is there on that but duration they project that Okay. how that or and Or gets of projects? these forth less maintenance maybe margin And the or there's of the on margin? any the longer, some gross rule helpful. we the of operating about margin, guys kind longer-term same? the of something fleet you think might about economics is is it the

Brad Barber

rate environment. project longer or of of more a project. machines the on the go to that's for product we see multi-years see would And project rates. a supply/demand flex for on in adequately as lower time, We you Stated Well, going a may handful long so. the a a project, on month going project a to that of you typically period that's just more it's rental put Yes. hundreds the consume a plainly, a larger you machines than the consume outlined, a

just those are simple So around economics the that. kind of

of the also price to the in happy increased the of where customer our very proud as out say projects in types being project to with these that rates quarter, number X.X% sequentially, it That we're I as year, coming increase will stated, we're QX among we're X.X% showing you produce. that our wet was. of yield shown the last in XX% That was and really And it the types. all reflects that was all

in and the So, -- discount job. of yield we're look we're the any duration quality and rental certainly certainly looking business, you consider not to not the you products. at the But

Seth Weber

it. Got

margins out a -- auction been used just Okay. of surprisingly investors, are look high. kind of sale And were It's point the But you then at lastly, concern maybe pricing. for obviously that is more soften, like there used it's whether suggesting that or auction that's the that? online equipment new anything to more might shifting there channel or coming you towards to prices anything start

Brad Barber

mean were the proud in margins are with and I the for that of in There's very sales have that no not. the line low I their to and our the as Steven, forward we we the fleet of going plan. and expectations, the of rate future. going performance But so going the type equipment early year gathering as concerns foreseeable marketplace, used think it are keep operations I we're of an I in But rest similar it's our achievement. as our to margins. right abundance stated of We're constrained happy, equipment into equipment that there's for to any in we're to softening of again, not mid-XX%s see

Seth Weber

it. Got

Okay. Thank it. you, guys. I appreciate

Operator

Please Rygiel from Riley. The next ahead. question Alex go is with B.

Alex Rygiel

and morning. good you, Thank

As you at had where how investors peaked, cycle and/or rates respond felt utilization would the to that? peak

Brad Barber

for XX course, we'll the few number you over this new last at speaking I the The XX this I asked that to I you we've rates have in industry a and an has don't headwind we specifically rates I on to What rental balanced don't the locations but going pure-play It's rental think that slight year-over-year point feel fiscal would as utilization Alex, like added persistent utilization. our year, increasing peaked. of peak to indicate open business. peaked over. with growth, now we're things of that focused of fleet think our forward variety -- -- a the our substantial is interesting, a and are want of factor I can be time, on But when on going coupled assure H&E. it's the that's utilization that we're don't the years, question, not opportunity with approach

Specifically, I'd expectations I warm all of year be to just to point would want full with metrics point out opening, those locations with rental return can utilization. we're and out these you rates, of impact dollar And the internal utilization how we we're exceeding consistently other to prove our strong starts.

I while don't well, we're utilization. have to headwind a do we're -- on So, our think going think little I going year-over-year

performance going result is with year that's think to us other enhancements, be we get really than to to run yet hugely the net utilization peak-ish I what's the be of positive. these happy, we're last exception we going think I to going Nothing if while or is for and similar less happen.

Alex Rygiel

And more expectation market the to a rental Do that are to number any favorable on your then, you a -- you there having some other in is than modest warm headwind words, find you're starts, rental gain there share? might even the of rates this yourself rate be printing? to to penetration or other reduce positive rental extent for more improved penetration? other rates, can pressures And discuss

Brad Barber

times really people by less XX-plus should it's And When of crane year -- rental of about in there's and they we earthmoving of speaking dollars for for largest to when the don't we No, we customer assets measure don't better it's less, buy shift. refer commodity were that distributors being so penetration, marketplace the they to part spent of base history, rent absolutely as were they when purchasing one the we've volatility. buy. the And they as buy and not. the distributor, we're uncertainty, a of of there's I assets. much a our founded a opposed talking economic witnessed, Or say buy, penetration,

rates get while with I look to we're share. Secondarily do in we'll growth. can you continue more our favorably I so taking from when into comes think hypothetical it you growth that, And would and we shares, can at compare don't market industry, anyone the to market quoting look that and

Alex Rygiel

given And coming being made, option hypothetical noticed the last customers some uncertainty if you that any cycle? back they to buy, that a scenario, made future, were but yet decisions pursued time point have this of comment to at in the just in those you not rental in

Brad Barber

Look, can tell very window not rental buying time, I been one will on to no. consistency, distribution the seen it's It's the that's can customers, our their to using short of go ads. rapidly it's working you do some H&E -- rental a of traditional broader periods measured and with time. I've any But slowly, the some anecdotal the consistently process. we at they thing process why over back for and in migrate years, have you here count is when customer to moves XX

Alex Rygiel

Thank quarter. helpful. Nice you. Very

Brad Barber

Thank you.

Operator

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

Brian Brophy

Source is your about integration, thinking Stanley. any This to could how about relative and updated expectations? how Thanks. gone I thoughts One Brian morning. good on Hi, was the talk M&A then, hoping on you M&A that's pipeline? you're And Brophy for

John Engquist

Sure. I'll take that, Brian.

So first standpoint. Source off, integrated One last We a system Source. fully from year One

expected. We as on are running our performing platform, well and have them up they and

going that far There's acquisitions and M&A, continue we'll on we're capitalize still meet but able year, out to hopefully, M&A there. looking fit of be for. deals. lots opportunities our the pipeline As needs pursue that as to And We're betting consistently to this remains we're strong. what

Brad Barber

add. let Brian, Yeah, me

disciplined same acquisition relatively assets markets just been. questionable At rental opportunities in ever been. We the will is, pipeline our as old fleets. poor stated, strong it just speaking, John has overpay for we've As we're or not as for ever as simply time, as

hope a stamp get to do boxes you we to conservative of we assets. it locations But capital year. acquisitions for a deploying checked or you approach we and an because continue year somewhat us when that do to of tuck-in that see us take those continue the out can two so And a returns all on XX and one acquisition, can know to substantial XX a know to we

got other. enough not it's do We've one both. for We than both Now more can or the internally, adequate operationally. bandwidth

we're at more You balance can and see supports sheet substantially look our investing. than it

John this or deploy remain going is year. one with two to with as hopefully strong, we're So acquisitions. disciplined get we capital done but said, our where Pipeline

Brian Brophy

how kind XX this comment the you about we to much really on do ability That's then XX that? Is of Thinking guess, warm a is in to year? open longer-term how outlook a opportunity? And the think Thanks. for helpful. touching made. starts, a about multiyear I visibility there

Brad Barber

opening expect and company to markets Look, I XX not to reason same at are open see will our that we're locations do going pace. to think well come. should severe the open we not that situation, yet. The see opportunity If an this a going high-growth decades to go-forward bar is us But investors would a serve stable in were to disruption Yes. we on don't the be year of we basis to you recessionary forward. our only economic that continue type and locations XX for a XX XX period,

Brian Brophy

me. That's Thanks. Obviously, for age it. one helpful. fleet last to Got continues creep And higher. your then

you're much going forward age age how fleet a in You kind should curious younger thinking improves? run Any we historically guys think how how equipment to changes and as you're about changing availability of fleet that. have about fleet as approaching

Brad Barber

Sure.

came quarter-over-quarter, aged than Our when a I I That notable was think being mean, a from away month were fleet year average there at not creep an on, One to rental fleet. closer of -- tenth you quarter Source really to industry look last -- you you forward it. if age or little we're something they a of then we because a had saw are a younger bit than said, increase is

so. we So very age to we're want to fleet If do a have young further, a we fleet. our position in

growth rapid this And Say profile than some planned growth. with like I be so, age else. XX, younger the have know industry could XX it's younger much everyone we it we don't But and again, -- this much it that and with differently, kind of today. same-store our if expansion average we're like branch we

in us aging I relative not to issue. rental have But have be kind very material should range we to please our reminded, and a see the fleet to think of continue we competitors. you are expect young a hover

Brian Brophy

on. Thanks. I'll pass it. it Got

Brad Barber

you. Thank

Operator

Instructions] is go The question Avi Please Jaroslawicz [Operator from ahead. UBS. with next

Steve Fisher

Steve good morning, Fisher. guys. Hey, It's

So just little utilization want to get a into time bit.

seasonally, As you we're build also the thinking impacts QX. expect to but about you utilization for out progressing, called weather year

goes through or should we year-over-year expect in expect the I Do thinking same? So, time, narrow in year you as to QX? about time the be stay change to how that the on, utilization think, about

Brad Barber

physical bit. I think our peak. little would to probably on it going little a think have stated But I narrow I utilization a as headwind earlier, we're think I

expect that gains continue between You we traditionally should peak, in we the to now utilization. and where of get October, incremental end physical

As we against week. Rouge, this we're sit this in utilization here XX% up Baton morning, bumping

be, where including And expect so we not the the yet. it our we rate to and It's gains -- in are with growth. the busy of we're part right season

be on drivers and the subsequently behind going of more ahead all I a utilization profitability. think on year-over-year we're a other our return comp, So importantly, and metrics to but well little

Steve Fisher

it. Got

just And so turning CapEx. to

So earthmoving. last same fleet percentage period mix, from material for is X points flat your is up looking year. in handling, down AWP, AWP down age The at in

within how trying I'm that? the right besides Is about be to So just yes, thinking way rebalance should to would about that we think volumes. down in Seem we CapEx, assuming imply that fleet. everything of AWP as it? about think be the the you're terms to mix

Brad Barber

volume don't to have is right? platforms. very It's work And meaningful still been as investment, mix, aerial intentionally very are and brought some our I love future reconfiguration, higher And so, areas Well, serve you're overall it's we we'll we of down going the and to percent very that manage having much piece We to the we more we and intentional. XX-month of customers. see the you a better management, where of continue not period AWP and referring other be. and as into the clearly thoughtful a improve issue what to capital returns where see fleet returns are think our components to, over redeployed but a a opportunities We're opportunity. our last

Steve Fisher

then lastly And just sense. makes That for me. Okay.

really Can vertical little So also, pace kept has commercial? also market remind you're can surprising. you think of end And business, looking of rest your the I the the dynamics that is at you mix, there? much which exposure just some a residential with your how the discuss of is seeing us non-res

Brad Barber

rental? our that last... the of non-res much How is Was exposure

Steve Fisher

Is commercial?

Brad Barber

business which on then that It's is varies time. point particular and Commercial, the depending multifamily. we small nothing region going in have projects on anything a than tied it our residential, a the like are is It's and at in certainly to almost piece. larger

commercial do of. So plenty speaking work, of and we work you're on depend it -- commercial of what type would but

Steve Fisher

for That's great. the quarter. Okay. guys. Congrats Thanks,

Brad Barber

you. Thank

Operator

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

Jeff Chastain

you, to everyone today day, Well, speaking look us, you Good Okay. we time and to thank with the again. and taking forward join we appreciate everyone.

Operator

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

now may You disconnect.

H&E Equipment Services (HEES) 27 Apr 232023 Q1 Earnings call transcript