H&E Equipment Services (NASDAQ: HEES) reported Q4 EPS of $0.11, $0.04 worse than the analyst estimate of $0.15. Revenue for the quarter came in at $278.4 million versus the consensus estimate of $267.95 million.

FIRST QUARTER 2021 SUMMARY

• Revenues decreased 2.6% to $278.4 million versus $285.9 million a year ago.
• Net income was $4.2 million compared to a net loss of $(37.0) million a year ago. Included in the first quarter 2020 net loss was a $62.0 million pre-tax non-cash goodwill impairment charge. Excluding the impairment charge, net income was $10.8 million a year ago. The effective income tax rate was 27.1% in the first quarter of 2021 and 21.9% in the first quarter of 2020. Excluding the impairment charge, the effective income tax rate was 26.2% a year ago.
• Adjusted EBITDA decreased 16.2% to $83.2 million in the first quarter of 2021 compared to $99.2 million a year ago, yielding a margin of 29.9% of revenues compared to 34.7% a year ago.
• Total equipment rental revenues for the first quarter of 2021 were $156.2 million, a decrease of $18.3 million, or 10.5%, compared to $174.5 million a year ago. Rental revenues for the first quarter of 2021 were $139.9 million, a decrease of approximately $18.7 million, or 11.8%, compared to $158.6 million in the first quarter of 2020.
• New equipment sales increased 22.3% to $37.7 million in the first quarter of 2021 compared to $30.9 million a year ago.
• Used equipment sales increased 33.8% to $41.8 million in the first quarter of 2021 compared to $31.2 million a year ago.
• Gross margin was 33.4% compared to 36.9% a year ago. The decrease in gross margin was largely the result of lower rental gross margins and revenue mix.
• Total equipment rental gross margins were 37.4% in the first quarter of 2021 compared to 41.3% a year ago. Rental gross margins were 42.1% in the first quarter of 2021 compared to 46.1% last year. The decrease was primarily due to lower rates and time utilization. Margins in the first quarter of 2021 were also negatively impacted due to lower revenues associated with an additional billing day in the prior year quarter on February 29, 2020.
• Average time utilization (based on original equipment cost) was 63.5% compared to 64.3% a year ago. The size of the Company’s rental fleet based on original acquisition cost decreased 8.4% from a year ago, to $1.8 billion.
• Average rental rates decreased 4.0% compared to a year ago and declined 0.2% sequentially.
• Dollar utilization was 32.0% in the first quarter of 2021 compared to 33.1% a year ago.
• Average rental fleet age at March 31, 2021, was 41.5 months compared to an industry average age of 52.5 months.
• Opened two new branches in the first quarter of 2021: Lodi, CA (Stockton and Central Valley area) and Concord, NC (North Charlotte area).
• Paid regular quarterly cash dividend of $0.275 per share of common stock.
• Accrued expense of $1.0 million for litigation loss contingency in SG&A.

Brad Barber, H&E Equipment Services, Inc.’s chief executive officer, said, “We are optimistic about our opportunities this year as our rental metrics are steadily improving. On a year-over-year basis, physical utilization surpassed early March 2020 levels, which was before our business incurred any significant impact from COVID-19. Further, physical utilization is currently averaging considerably higher than a year ago. We are pleased to see rental rates stabilize and expect continued improvement as we progress into stronger seasonal quarters.”

Barber continued, “Additionally, used equipment prices have improved, which indicates to us a healthy balance in equipment within the markets we serve. Forward-looking industry indicators like the ABI and DMI have also shown solid improvement in recent months. We believe our exposure to a very wide range of project types in the non-residential construction markets as well as our expansive service footprint in high-growth geographies positions us very well to benefit from these improving trends.”

Barber added, “Our financial results for the quarter were impacted by the historic winter storm in February, which significantly disrupted the on-rent momentum we had been building. Approximately 40% of our locations were closed for nearly a week and several areas within our footprint were without power and water for weeks. The forward momentum in our business has since resumed. Total revenues in the first quarter were only down 2.6%, or $7.5 million, from a year ago. Adjusted EBITDA decreased 16.2%, or $16.0 million, and margins were 29.9% compared to 34.7% a year ago. Margins were negatively impacted by revenue mix as higher margin rental revenues and parts and service sales decreased while revenues from our lower margin distribution business increased compared to a year ago.”

Barber concluded, “We remain extremely focused on executing our growth strategy. During the first quarter we opened two new branches and thus far in the second quarter, five new locations began serving customers. With seven new locations opened year-to-date, I am very pleased with the progress we have made toward our stated goal of eight-to-ten new branches in 2021. We also continue to explore opportunities to deploy capital for acquisitions in the general rental and specialty segments that will further expand our geographic scale and product offerings.”

For earnings history and earnings-related data on H&E Equipment Services (HEES) click here.