HEES - Earnings call transcript Q2 2024 | H&E Equipment Services, Inc.

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Operator

Good morning, and welcome to the H&E Equipment Services Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Jeff Chastain, Vice President of Investor Relations. Please go ahead.

Jeff Chastain

good and operator, you, morning. Thank on Welcome second to our call XXXX to financial everyone quarter performance. review today's A press with release issued following website, our results for and schedules the be that's statement www.he-equipment.com. earlier the can found supporting along all on H&E today quarter was under will Presentations. website Investor slide on presentation is posted in today's accompany A Relations and tab discussion also our the and Events

and please Chief and joining morning's X, on turn expectations could, today's believe, call will laws. Officer; words Barber, you'll federal Chief him, Brad expressions proceed to President you Engquist, may, see Brad securities me remind statements call and such Magee, statements. the X about Officer as and anticipate Executive of Slide review. Final that constitute I our beliefs John the forward-looking On is Officer; Secretary. statements contains I Chief Statements to and Leslie Operating call over containing and today's But within similar other Slide as expect, Corporate before this forward-looking begin the meaning

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

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

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

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

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

Bradley W. Barber

quarter review our Thank you, Welcome second Jeff. financial Good results. to of XXXX morning.

appreciate As your H&E. always, in we continued interest

an Slide states. our X. highlight The was helping U.S. to and in growth quarter in significant challenging growth branch of branch network catalyst expansion Proceed for XX nonresidential to environment our serves our as count further we spending the to year-over-year penetration fundamentals. as led increased a in the declines as The demonstrated important second a quarter to in lower business more key offset expansion

compared of and then review a review successful I detailed industry growth some on given across rental with ahead markets. lies metrics We our to financial financial improvement progress our of what state the XXXX. we'll most of profiles. at an and second follow our an developments industry's update the but of second opportunities of and on to expand most demonstrate close any the experienced my performance, I'll quarter performance with on decreased the as quarter happy is and a continue transitory to our address of measures, construction will Also the date objectives comments one will observations of questions. more order rate on offer a quick Leslie to growth be expansion business. we financial key

Slide please. X,

both rental sale revenues equipment X.X%, ending a in the record XX.X% compared June with sale the trailing quarter discuss Of improved months rental XX improvement moment. for our I'll trailing and On XX.X% the of the lower. more expansion to equipment. rental a Second X.X% on support Margin of rates in with decline Margins revenues quarter our equipment rental in equipment trailing were Total the quarter total from increased the mixed. second offset detail a levels. a results modest basis, rise increased were months impactful reflecting which in XX-month generally rental revenues XX, XX remained an slightly partially in note, initiatives, near by XXXX. greater

by lowest fourth equipment quarter rental reported expanded costs XX.X%, as our since Finally, when a the the our by growth representing more increased year-over-year size, of period X.X-year fleet than fleet XX%. measured we XXXX,

please. X, Slide

three ending including with opened of Turning Since quarter the XX% new The to growth same year-ago Also, months revenues rates. X.X% highlights comparison. in X our locations XXXX, were program, a to An resulting to separate from first was Revenues eighth the compared accelerated location throughout the added, second significant XX.X% from gains quarter. June location second XXXX. continued since demonstrated the of through November of seven the network of and XX second acquisitions. On following operations. compared from close our openings rental opened in branch we the were close in -- the XX-month branches rental eight of period expansion our over rental through quarter trailing improved quarter new of XX.X% basis additional our the revenues the higher. XXXX, XX, XXXX, margins

expansion an regions opportunity with in acquisition long-term excellent on multiyear is geographic for focus ongoing growth. attractive Our company in our

a Rental quarterly year-ago rates X.X% improved the compared in X.X% the quarter basis. with quarter decline on a sequential of to

appreciation increasingly June the Although XX, difficult XX year-over-year an ending over preceding comparisons X.X%. XXXX, are was becoming months rate

points projects of quarter second basis largely medium-sized in construction and XXX a utilization a year-ago decline small and fleet to in project averaged starts. pace of reduction slower the to the compared The XX.X%, related new decline a Physical quarter.

XXXX. first The represents physical quarter XXX in measure from improvement second quarter basis a point utilization of recorded the

quarter was utilization outcome in due dollar quarter second lower utilization. physical second the in with largely XX.X% to of the in XXXX XX.X% decline a Finally, compared to the

of normalized we of navigate please. I an our for addressed want half our spending The current which cycle, our construction in starts. last We in industry as X, quarterly address of in indicative growth a to to view The compared extremely spending chains. pace and of growing XXXX is construction to more observed more in disruption acceleration Next, we in those spending period years transitioning maintained during the during business of supply second industry resulting XXXX. strong business fundamentals. environment moderate view conditions and material during a of by shift of Recall, equipment tight exceptionally sharp XXXX. the projected a elevated in occurred availability, is industry years, Slide we opportunities aggravated that the a update, period

local elevated leading an projects, stringent the continued especially across ample are by supply expansion locations XXXX, to our and chains Despite a are equipment smaller a opportunities. adverse component of have megaproject project in more activity project of supply we which an In protracted persistently lending rates of industry U.S., activity, while standards recovered have lines, continue on of numerous representing this most for the interest equipment. demand effect backdrop, to encouraged source

or in our Coast, Dodge or branch within greater lead projects of Our state expansion and million to participation multiyear to in of these fact, XX% a scale. which increase Approximately network, Mid-Atlantic represents branch are these XXX XX projects planned efforts network. According to XX% as with $XXX projects our our of progress together density regions, current in Gulf value Southeast count. in continues fall branch Construction grow projected and our

in their and industry H&E and Megaprojects support duration, more key our are given they a long fundamentals. growth meaningful and of size opportunity of a stable provide for industry demand base

construction compared further increased spending the from megaprojects expected to greater is Dodge major expansion spending growth infrastructure project to funding sources support With XXXX both levels. project addition in expected with to can forecast expected of of spending In an of increased latest spending, why of from year-ago data from concludes you lead Construction level these the activity. see

the first XXXX, going planning growth encouraging which for and X value beyond. months of increase measure Also, an indication nonresidential has for of the Dodge's into flat project of been or of DMI, in is activity the XXXX projects

to for are therefore, in growth industry our We committed the confident objectives. our and prospects remain

X, please. Slide

growth of successfully four Southeast, regions with locations locations to activity in the single opening enhancing opportunities. near geographies increased record in increased which quarter. set state followed presence second the in We achievement first May the continue of and a of our areas the resulted Montana, the We Central construction Also, our branch potential. Gulf These branch acquisition six attractive Coast Mid-Atlantic strategy and a our quarter, our the U.S. exposure with quarter, project opened represent during of Northern while in excellent the improving to six completion in latest presence XXXX and branches diverse our addition in long-term to execute

a in representing the across with XX, June states, approvably XX XX% months XXXX. the of XXX growth ending XX second We of concluded quarter XXXX branches last

to of XX openings, of new well move the goal into is XX reach we targeted within branches acquired excluding branch the half second as year. Our

Idaho, adding region our our of year-to-date the the of close new opening -- in of in Falls, number announced -- quarter, and Since we the eight. Idaho to presence second increasing total locations Mountain to

revised range expenditures our remain quarter Our XXXX record in to we million young which XXXX growth we fleet last age market a our demand. of fleet million meet in $XXX leverage as prevailing to $XXX expenditures,

and has solid presence establishing value in the over performance a U.S. years, tremendous made supporting H&E across closing, creation. financial the strides X In our last improving growing record while achievement of

that's presence of a achieved branch are mid-XXXX, a established regions geographic establishing XX% growth increase and since opportunity. rental company an emerging pure-play We industry-leading in in growing

name activity encompassing manufacturing -- access LNG projects rising solar presence expanded facilities, megaproject to improving and advanced a few. this With export comes to the data installations, centers,

Our our while the strong age life cover of cycle at are as and young needs execution important the customers. level, our IT fleet including outstanding of operating of equipment company attributes systems mix that is the rental facilitating our advanced

of the elements to cycle. as as our today's other these of H&E we of a leg remains for our environment operating in construction well business next as position Expanding focus profile management succeed the core

Now I'm detail. quarter discuss greater over in going turn who call on the Leslie, and financial to to XX, our will to Leslie? performance Slide second

Leslie Magee

outcome. or of second one of factors the XX the start a XX our was branch the close product count network increased branch locations quarter warm of improved contributing the XXXX, several the to our locations, . Since same revenues our grew our to strategy and of and with of of quarter approximately $XXX.X everyone. of increased million XX.X% Good and this from sales over comparison, XXXX morning $X.X or to original Also, revenues, Further of cost, morning, million fleet second $XXX of Slide at resulting $XX.X of second compared profit profit a quarter or the $XXX.X second or quarter million Rental to of substantially higher growth X.X% was X.X% Brad. to $XXX.X $XX.X an year-ago and expansion equipment. you, review compared the new Thank revenues in quarter second with Revenues quarter. improvement gross and XXXX. totaled of to XX closing I'll in the of equipment eight acquisitions. the The billion. three concluding welcome, the other million, period margins. or locations OEC, the begin due XX.X% million rental

Finally, quarter quarterly rental rates a better ago X.X% quarter, basis. X.X% in the were sequential the while declining on year than

the improved or Partially sequential quarter physical physical in was XXX basis quarterly points offsetting lower a below XXX outcome. points. averaged which On XX.X% the utilization, average the year-ago basis, basis revenues utilization

The million. sold our was lower sequential of XX XX.X% pickup compared to to fleet the new industry on million estimated an equipment aerial reflects fundamentals. sale with of rental of work and equipment Sales sales quarter equipment. the the of following the The in management from year-ago was average which equipment result, strategy an handling quarter basis XX% Revenues of in increased quarterly a to months. material XX.X% prevailing $XX.X a $XX.X alignment platforms declined age

the profit Gross as to was on second rentals In margin revenue of compared XXX unfavorable to sales of the margins and up equipment of rental second mix the margins points XX.X% basis quarter by equipment. $XXX.X with XX.X% margins margins were below XXXX, the X.X% quarter XXXX an of result in in second XX.X% XX.X%. partially compared rental lower on -- totaled million, year-ago rental from total offset were higher XX% quarter

remained XX.X% margins Finally, XX.X%. of to XX.X%, of while equipment compared on equipment XX.X% to sales margins at new elevated improved rental to sales compared on

expense, a margins in year-ago margin mix. SG&A sales partially lower same the of and from second a offset $XX.X XX.X% higher of unfavorable an million with was by equipment. operations of revenue the Income higher XXXX, decrease to million the compared XX.X% please. in quarter in decline due gross resulted in X.X% the quarter rental XX, was compared Slide lower the on of The margins margin rental primarily $X.X quarter revenues to second of to quarter lower

the Proceed share second to in million or income Net was please. XXXX. income quarter share compared XX, diluted per per $XX.X $X.XX million of Slide in or $X.XX second quarter to diluted of the net $XX.X

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

EBITDA quarter. $XXX.X increased in the second compared Proceed quarter year-ago to $XXX.X X.X%, in the Adjusted million to million Slide please. XX,

Our by XX.X% Higher on second to of in the rental of were quarter. adjusted expenses XX% an sale the compared EBITDA quarter equipment. SG&A high gain increase exceptionally PP&E year-ago and margin in in was sales margins partially offset on

Slide XXXX was please. opened increased XX.X% totaled steady Next, initiatives with largely to and SG&A quarter $XXX.X activities. of liability branch in contributed close associated professional in our with XX, increase expense. insurance in second since included the million and facilities amortization SG&A growth the the XX.X% wages, million acquisition $XX.X XX greater revenues costs second second million payroll and relating was compared other benefits, attributing the the to quarter the second and Also the quarter and expense quarter The than year-ago higher XXXX, of to depreciation expenses branches increase. quarter. year-over-year and our in taxes $XX.X due expansion to of higher salaries, of XX.X% employee or fees to of

expenditures Gross $XX.X XX, fleet Slide million. $XXX.X please. capital fleet net capital second of quarter in million totaled the expenditures with rental rental

the figures million, $XXX.X XXXX, XX, and X were million For respectively. $XXX.X ended June these months

[ In million PP&E. totaled of net X in $XX.X PP&E gross million ended PP&E for addition, sales expenditures $XX.X capital of And months the ] expenditures XXXX, the capital $XX.X PP&E were net or million. capital gross $XX.X expenditures quarter second with XX, June of million

compared same used comparison. $XXX used was cash ended cash $XX.X months And flow acquisitions, for to flow period flow of the excluding million Free June over free cash million the X adjusted XX, was $XX XXXX, free million.

utilization Slide our in includes cost, million months June was an quarter and fleet Based XXXX, of of quarter. our second was XX, original fleet Average with our $XXX on XX.X% on approximately -- billion, XX.X XXXX of XX.X% XXXX, age an to We XX, quarter OEC closed in to million compared on of please. the equipment in months. average fleet year-ago industry dollar age second an increase XX size or $X.X compared average to compared $XXX the June approximately XX, the XX.X%

the was was due physical a basis. to As quarterly utilization. up The measure on lower XXX Brad previously sequential noted, primarily decline points basis

Slide A XXXX of leverage and X remains on XX, billion please. credit of target including facility. ratio maturities of the a X.Xx, the which a net debt balance unsecured within sheet solid continuation our of well of Xx reveals no review December our $X.XX range notes capital position, senior before to senior in our

Slide XX, please.

Finally, the $XXX XXXX. we billion December closed $X.X quarter liquidity of availability compared billion the second was million, on while facility excess ABL $X.X to with under XX, approximately

$XX concerns. as minimum $X.X regular the of And of availability billion, defined with excess paid million. we ABL Our finally, agreement covenant remain any remains availability by And free we our our the continue quarterly dividends in intent And dividend is to quarter of of it $X.XXX to Board pay approval, stock our while per to of dividend. XXXX. common are share the second subject

And company conclude, to greater solid XXXX, that reach, stronger the a diverse in I confidently please. business an and and XX, fleet management Slide structure larger, team possessing H&E a a is in to state a capital more cycle. managing Moving geographic pivot experienced accustomed to

exceptional. in trends With attributes establishing focus scale of in we place, these footprint, our growth increased expansion spending move are essential the construction in and our where XXXX, ahead regions continuing on geographic

megaproject XXXX currently the noted our spending when age, state and opportunity, while presence for generation years reduce has adjusted expenditures past in record to to Also both positions cash branches a grow the expanding XX our meaningful XXXX flow XXX which With company for across decision gross young our participation our an operation, -- announced in free transactions. over our intend previously in we network. fleet leveraging multiyear fleet our X as

When industry ample combined expansion to to XXXX an year-over-year according with liquidity additional Construction in possess, available pursue capital XX% a growth resources in Network. Dodge expectation we with opportunities

provide are now period. instructions. Please we Q&A Operator, to the begin ready

Operator

comes question with Instructions] James. from [Operator Raymond first Tim The Thein

Timothy Thein

how whole rates accordingly, balance I how about outlook. as transpired. respond looking a of the terms how relative start as Obviously, have on to have I Again, curious again just it's I'm terms perform back how things how your guess your you've environment was resetting CapEx the last on in look relative back terms if the of play we'll just and year. the industry and quarter -- think question you're responded had the of basically base the through and your to kind rate first in a rates. I expecting to that seen rental expectations, you of -- expectations you guess so we in to of out how you

Bradley W. Barber

Rental Tim. you, Thank basically expected. as performed rates

been continue point flat improve, potentially and was an -- Our to there X.X% in mean X.XX% X.XX% quarter. behind slightly be very or this down to has that I them opportunity anticipation QX for and incrementally

are. So we accept they where

Our utilization we in that was backdrop, a that rates slightly a improvement physical utilization did. not than With more we the bit hoped as surprised mean disappointing. we the would I quarter see within in little lease. by

On a megaprojects on a under weekly basis, go-forward our rates expect we're continuing to pressure. I more as presence to basis, expand on come

I a I build markets not rate to due participate because for we're Now we grand the up we're expect on absolutely to megaprojects. sequential with on clear, discounting at that that in be the a I don't exists, basis. decreases for weighting to all basis to medium-sized simply small- forward the rates just work to local going want our and continue starting on decrease think go-forward But likelihood any

yield is moving slight for likely forward. result however, of But megaprojects rates calculations on As could to elongated And is to lead amounts do when some degradation sequential basis and view time. a still of that equipment the vast our for H&E. know, positive very very periods consume that you the we

Timothy Thein

it. Got

expect just Okay. rental should the terms I of corresponding of the what -- through equipment there cycling growth component. the higher-cost inflation is, to should equipment size uplift past be helpful. equipment And how That's revenue revenue the of of, just we in it, the we in then in that relative a call XX% headwind continue dynamic of that think look the X%. just you given inflationary would of fleet to about of impact and terms without at amount couple Is to Brad, way a a -- the How years. for will to as on think growth about closer

Bradley W. Barber

Yes.

in out As comments, fleet old. stated what Leslie prepared XX her months the we sold of was

there's So inflationary certainly in I to what want understate an the scheme really we're that's incremental to -- I of want facing. headwind. minimal it, don't but

As we've supply spending and to to and better physical -- our for balance with a moderated improve. our allow us utilization into utilization look, to come demand

little we I've stated, a during dissatisfied I As utilization slightly seen the were because improvement of and quarter. more

not there's but occurring of cause that concern. hurt in there, scheme being minimal That piece mix a anyone's that's something real It's any it's overall of said, modeling. what's me involved. the certainly does impact nothing things. There's inflationary to If going

Timothy Thein

Okay.

what quick start that But bit to this those is some of softness in flagging, -- very just in the you're obviously, know history answer. cuts benchmark of Last which Have terms a whole in local again, were we shown difficult of policy to have not market. how of I in changes and what were a more to terms guess, And markets $XX,XXX kind rate alone lag this there different cycle responded each I -- see has Brad, rates? sensitive to one, hard historically you and to question, -- rates, relationship? a parts is if any in in of and one, Okay. but dynamic the probably accounts,

Bradley W. Barber

in we I dominate possess returns exists, it zero answer continue are very products. call way. -- all and local certain data, the H&E I marketplaces, anticipating of on -- data or with this focused just it In let's medium cases, these ensuring The small the me set to decline, capital. give regions increases believe we're that work. some decreases. using substantially the I'm group, speaking incremental discipline and we're same still and we're larger good that not peer That Let we and expect on which that any we getting our all invested of certain

I COVID, has So that if said characterized there -- start decline concern decline even in medium-sized been but the was of enjoy think And no COVID. are at to cycles, substantial we think any I prior medium-sized you in of and go point extreme work discipline this to of I -- I know little differently. right, each shown cycle going face had or customers it type there an and we back don't I basically amount prior in small- have would small to that rental rates. consider the very

rental of be much megaprojects how go-forward our on rate basis. put we think product product I on output a will a

Operator

next comes El-Sabbahy question from Bank Sherif with America. The of

Sherif El-Sabbahy

noted another is both to transition of a the expect begin, normal see more this rate expect XXXX to large you for growth? that you a you normalized Just XXXX have term? new to Or type be and peer year Do leg growth. medium up do the to growth in tight

Bradley W. Barber

to that by be I Sherif, pivot has these and work early here to type tell rates, and you, of small higher been believe for really we're make The a think optimistic done. quickly. medium work impacted could that fairly relatively that lot around there's interest to I'll prediction. longer that it's try

think I on to rates start it's actually decline. So to going see when interest we depend

envision more a sooner substantially that XXXX declining think to decline an from Within and to if that, answer interest And opportunity tells were levels. things outlook. us. maybe get I think rapidly our the better don't I XXXX current be rates than I view would the there's could

bad not about on just we how yet. bullish are I'm 'XX feel sure So we it's XXXX. seen. be But to don't just

Sherif El-Sabbahy

you're it still types your of megaprojects, just some of seeing seems uptake And Understood. on good very given projects. language those around like

on what EBITDA? the kind for year, expect incremental the to remainder flow-through of Just of see do you

Bradley W. Barber

can Sherif you help Leslie, the... with

Leslie Magee

Sure.

which of expect about we some And in on back rate driven fleet also do again, flow-through year-over-year to half here the one pressure margins of moderating lot XXXX. by physical thing expect themes year-over-year talked the in talked are half. drivers then EBITDA a about, And the utilization. lower morning, continued this increases, but expectations those we've So sales we've of lower year-over-year back note is

to and that the And a new big year, in store spoke have to expect degree way, also, of to we haven't back that costs we And the increase a in and we're driven seen higher out our to on our then focus by that we earlier in the half year. play going larger openings.

Operator

The next question comes from Stanley Elliott with Stifel.

Stanley Elliott

market. Brad, side. little I trying the did bit you curious the disappointment maybe through a availability I talked weather the And on from track what was for of Or we're a really the that utilization the in that to I smaller equipment contractors some was local is touch? softening sense kind how was more a of the was quarter? of some of which if guess that of seeing, impacting get out

John Engquist

small weather we're on each and ramp-up on pleased think had take jobs, fleet to which this to out was -- saw what our we're going more in midsized don't participation continue jobs really, the point . But to fleet the midsized I Stanley, these weekly megaprojects, large look, to on are our participation we're fewer utilization. we very large a and out with Really, And material More more see a impact And basis. seeing a that. is of a is coming and that every week. to what rate and of jobs John. decline I'll going ground. we're as we continued with the utilization. as seeing small Yes, impact

Stanley Elliott

how you about H&E's on years, think free it cash kind And you cash to free mentioned ability guys with of through the that have over flow and the Les kind cycle? couple the built of investors side, of stronger flow scale the should generate past

Bradley W. Barber

nice question. Well, cash a this going Yes. flow the we're great free through generate cycle, to at very growth. healthy year, Obviously, the

our As and are to you dividend. our know, paying pay dividend we've going continue to continued

-- you tuck-in a see real away And focus these continue going know, to those acquisitions. unless We're new Our up. real to locations a is transition, we pack to not XX we a a were to continue on but to ironclad open as disruption. XX

but since only been of And of so them those four we've XXXX, three perfect more able recently. to

actively those. we're So still pursuing

to All be traditional it cash of be free together basis. being That us approaching a makes for our annual that spending challenge years modeling positive range of the flow. profile X-year a mashed have that few to flow growth illustrated we will with on scale said, type with that an the in we X- be our last we'll generating the probably over cash in free

run, this grow with So growing, we're are going and when opportunistic to them. going heating the in in markets the short we're up produce year, But flow. we're cash certainly to free

So the we'll a given the depending year into we and some positive few that on next and cycle. settle have takes years, nice allows throughout puts be rhythm should the for us to flow free cash

Stanley Elliott

to not you on about we your larger pretty guys projects, add would there? accelerate, only cut like looking still are focused those the you that share. of that think that to kind out megaprojects just from dynamic cost on growth the ability with this service delivered It on should out to your megaproject that continue putting scale platforms all but there, to with probably down the seem remaining And ability

Bradley W. Barber

That's right. and We're just doing disciplined measured going to be about so.

I location, year. with balance returns opportunity bottom us XXX the and geography. focus XX-state reflects growth our line in while think profitability substantial front this have But that in to of on going We're always focus going against to our reduction that growth opportunity. we're we CapEx on we

Operator

Research Steven with from comes Thompson question next The Ramsey Group.

Steven Ramsey

curious reduce markets. maybe your to positioning normal but capture or versus maybe I'm seeing and you how around it if guys know year-to-date network that's slower to business, activity for competitors, to in it compare you're of the course optimize good normal movement the does those of fleet types. markets I

John Engquist

this this compared is nothing any Steven, to year years. different There's terribly John. previous

from to demand softer this the management. half fleet higher areas some opportunity. a have those Moving that amount can you bit basic year is on capitalize I fleet of with areas we from demand considerable just low is to first moved fleet little do the We a are megaproject tell of year. around that What every

there nothing from other any again, done unique what So on we've really year. given

Bradley W. Barber

in about flow-through. Steven, comments, mentioned me and add, let we're Leslie her talking

a on going We just to back the of down decrease a of throttle of we've management. fleet are the And completed. compared nice half front see fleet thinking just absolutely that product half the sales, we'll management. that Fleet year, to about of that's the sales year fleet in part

to are coming level locations who In where to what the got left performing highest And fleet continue allocated at nutshell, strategically the project it. want to and exposure a participate and that mega these is have have we the opportunities. we going we get very ensure we go to

Steven Ramsey

And with ] have megaprojects serving business type Okay. spurs opportunity on these of a fleet? projects feel right that gear. -focused, could? these of and that clearly, like Do more your larger base you helpful. give in Or megaprojects, thinking more equipment peers That's win [ specialty specialty like the some you're types H&E you you to do a to REIT maybe of invest larger you all capturing public about then of gen

Bradley W. Barber

we fair want we've a Look, that and more. we've gotten know I project had more didn't that don't question could we provide ever across if And your enough is we is more. very where that run

in fit at currently, We're level it but the calls, have. to For a It's us, on serve within we small will there's element worth about That on have organically. need will it our would to opportunity that that to we -- and the not have geography single to it's growing still continue of exposure. it's really continue a in continues over specialty. specialty nice at every speaking -- product not pent-up as to megaproject of grow of general every H&E we being or -- opportunity. stated, period lot for . That future We lies expand we to a and rental single be time. view

Operator

The Jaroslawicz with Avi next UBS. question comes from

Avinatan Jaroslawicz

locations? CapEx same-store the So new guide same about CapEx your year? planning you're changed from on the confident how that And just between to you a plans shifted of know branches? at you new of to need further are But I have this quick versus quarter. are for won't here in how all year? this As And here also, spending you we spend question the your held thinking you cut the any CapEx. have rest on that stores

Bradley W. Barber

the on location? in to but for loaded That's not a of of, little we separate the a We've spending, are cadence plan channels our CapEx. these To we're all very may a you associated. case. got thank traditional going and we view Avi, similar same-store Yes, front-end regarding question. CapEx, new be to have We moving -- from we question

to not So taking give from the we're one other. to

returns. of capital, our about said, constraints. Leslie to performance As not are cost we purely focused capital our capital, worried on We're and access

So not us. that stated, being that's an for issue

see disciplined. that's Going million. we're forward, comfortable we If $XXX CapEx how are feel be decrease, like with us. comfortable guidance? to to the are our Listen, be with I would going Currently, a so. to an $XXX to reason going we issue do we reduced just million we for don't

QX suspect put of I going peak with always We're of end high tell seasonality. will this go chances the not focused the were guidance to you in to it comfortable If seasonal happen and your are disciplined. the above say, in here a the year. being I'm on is your we've forth. We're going be guidance. to that's you XXXX, business. again what we're someone

Avinatan Jaroslawicz

second And digging Okay. for year. That back makes utilization sense. a just then into

you north last just time of was XX% start noted utilization that I believe. of QX, So quarter,

think amount and was you I are added it So there in like year. big seems the but warm deceleration a of June. a know I same last starts May in QX headwind,

us So Was QX certain having verticals were throughout an or it saw in Or lower there? you the the can talk impact the you outsized across quarter? utilization utilization trend regions what with about just board? to

Bradley W. Barber

going I we add is to The John, quote but John point very mean, time. at similar some in let it's just a or simple approaching consistent. takes geographic? time XX%. in it's answer know is Avi, some growth fleet. a utilization incremental profile you We've context, any fairly I'm made had about remained to the touch since talk I the was our puts that do in or want

John Engquist

of But last fairly north I it's seen you improvement a I areas, of incremental it's of than been has year, of some QX others. We're consistent. that struggle average obviously, -- little it's mean we've When mean, at since obviously, consistent. we've QX a had fairly XX% generally XX.X%. Yes, XX.X%. QX more speaking, it today. had look

average up points quarter quarter-over-quarter. third XX Our so XX%, about was basis

same challenging see update as least we'll little here fourth one this I speak next course, have we As that the sit our we today. into more that on expect sets would call. to in, about is a And year, on an get to at average we a quarter bump type of for suspect But seasonality of an QX.

Bradley W. Barber

you in basis we're year-over-year, up the our XXX press probably Avi, caught in I release, but down over basis XXX QX. prepared points think comments but points

more. up as capital accordingly our were And it, would in. metrics. candidly like for adjusted little be we have little We're a as we we go-forward understand We the So these by stated to But encouraged environment more. a we're our hoping we spending opportunities. to

Operator

Rygiel by The next B. Alex question Riley. comes from

Alexander Rygiel

understand kind is to to of megaprojects percentage what today? of percentage revenue megaprojects today? is us fleet And/or what help you targeted Could tied of your to

Bradley W. Barber

I we of provide partly, add mean OEC providing could. amount I'll start that I I a you, we to weekly a the guidance. Alex, going on while And on obviously, amount tell basis. we're can't megaprojects, number, I measure the of you OEC not that's wish

the happy a are meaningful the with on we're very of what seeing it's We that in basis. weekly and a we're cadence amount marketplace adding

business. to business. where had quarter. of a to piece preceding megaprojects we than not our of It anticipate our piece I OEC growing do a continue the it's nice our quarter deploying nice more and be not So a of of gains will we're making

Alexander Rygiel

or of sort kind maybe growing. the sort a of if talked but about exactly, quantify lot of megaprojects way backlog And pipeline Is has can't that about think or you you've to rate a XXX%? growth you like XX looked or megaprojects? it backlog so? in of that the it sort current bracket months from of is maybe Is XX%? over last might How kind this up up in Or of there growth it quarter what

Bradley W. Barber

have but the It's now, emerging. certainly a make same They've and projects year. comments it's at And more been percent, Yes. they're a year substantially. be announced think daily I basis. I up tell this you, from ground They're on about I being in able advancing to -- new can I'll projects substantially. that a year-over-year, don't emerging. These just not almost are are break up

that So compared anticipation it's months a substantial improvement And as be I'll in is the XXXX months. last thing in to again to now, say from about XXXX. XX the same able my XX

Operator

Wondrack from Sean Bank. comes Deutsche with question next The

Sean-M Wondrack

a please? or just beat as the on gating factors some breadth are Could comment megaprojects. horse, or preventing presence of firms proprietary on tech? equipment of national couple -- but a don't that, I to you Sorry, are mean your these dead more there certain there Is that such just smaller

Bradley W. Barber

Well, power or It's on who confuse not I've or certain not investor there that's someone I meaningful contractors trench certainly think with And had an case. disadvantaged. There would use asked I disadvantaged, without really maybe are the me those cases, specialty, be H&E important some supply a Look, individual job. can and it's holistically HVAC megaprojects true. megaprojects, generation particular products. on in be. can't specialty a people certainly time. and this you're

types products general those telehandlers, and that earthmoving use trade don't the ever products, rental, only we're air various aerial are of of there types that use who the disadvantaged. nature not platforms, the compressors, work things However,

Now your scale do. that our is I I don't fact, to it's one. no believe would at times may assume have number technology we we size misunderstood do because mean, and outside our second advanced be just folks become how Technology technology, question disadvantaged you but one. many in of Again, is that?

requisition Our their customers on. manage accounts, reporting, and telematic They pay goes equipment their bill data, online. on they list and on their online, their the

So we're disadvantaged in no respect.

you consolidate pay for have excluded. have account their you get if it a If their more ability to not if you don't customers to view your to portal, and billing, absolutely do don't broadly, you're manage an online, have telematic going data,

So X the in participating. by companies volume it's probably the top U.S. X, were who

what If you to you're see these on smaller projects, to and you're going that's going see drive participants. not

Sean-M Wondrack

X opportunities Right. it these years, megaprojects, into and to that sort follow-up. That's doubling of to going access their sell X you some just very or access about does top maybe weren't When leads have this XX the this of to but earlier over create players helpful. my market demand these to lack kind a here? think of share last acquire And themselves the mom-and-pops don't of

Bradley W. Barber

The answer is yes.

many going they capital, seen The realization for disadvantage handle. going for I H&E to to business. years ago, or their number hurdle come and cost can't larger technology . pay competitors, or access have is that or the of the of We either they're to their X that they cost compared equipment, And price a the have just have out And X mean, have to actually may sell said extreme years, yes, more purchased companies that change. of business business that realities an them. never it's their companies of slowly we to they the just opportunities. they're sell a those

Sean-M Wondrack

one in Great. appreciate could And if more. I that. squeeze I

we to mean past few years of a Just what the to infrastructure on be from It ago. in rollout spend? maybe tell do to was the of difficult It's the the have accelerating an inning seems to of but couple infrastructure slow side, sure answered this, and haven't There a I'm you where you are in not little sort kind idea I if relative a bit. came of we're years. sitting. funds

John Engquist

as while take I in breaking work And see Look, name infrastructure question. really multiyear mean a we're is day. funds at I'll And seen steam. ground opportunity. bridges, seaports, you're innings early every you that it, the think these I Yes, -- we I projects we road the work that airports, pick this released. starting to if mean have looking up look, the are

So short answer early is innings.

Operator

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

Bradley W. Barber

operator. you, Thank Yes.

want growth of we our is conclude strong I least of track today's not couple to a the to which commitment record and success. call, reiterate strategic our Before things, of

XX or the earlier, nearing I expect the H&E's of established locations successful year, be H&E program. new stated more implemented the highly by the opening of profiles new led As we in attractive one in since location industry we By will a most end XXXX. strategy this growth accelerated

tuck-in acquisitions the locations. we've of time, adding same Over XX four period completed additional

growth achieving been locations, on been and have margin while growth pleased improvement. we our we've significant the with focused also And same-store in

Our we our our durability and shift to that and plans, pursue to with on as us branch greater purely tuck-in winning the strategy, in capital of We look from you We additions continue and the margins. expectation ongoing rental update XX people strategy acquisitions proven criteria. associated to our achievements. both necessary be remain future forward committed XX we to year to additional revenues location our new away possess distribution fully support growth per meet to with focus to accelerated providing has a our

your conclude again With to you call. to this, we'll interest today's and And we continued look Equipment Thank soon. appreciate speaking H&E forward in Services you.

Operator

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

You now may disconnect.

H&E Equipment Services (HEES) 30 Jul 242024 Q2 Earnings call transcript