H&E 2022 CapEx to be largest in its history

H&E Equipment Services reproted fourth quarter 2021 equipment rental revenues for the period ending Dec. 31, 2021 of $203.7 million, an increase of $40.8 million, or 25.1%, compared to $162.9 million in the fourth quarter of 2020.

Rental revenues for Q4 were $182.0 million, an increase of $36 million, or 24.7%, compared to $146.0 million during the previous year. H&E reported 68% of total revenues were generated in the non-residential sector.

Brad Barber

Speaking during an investors call on February 24, CEO Brad Barber said H&E was able to grow its fleet last year despite manufacturing challenges driven by supply chain issues. “I want to highlight our fleet growth in 2021 as we ended the year with approximately $1.9 billion or 10% larger than 2020, with gross capital expenditures totaling $436.8 million”.

Barber said. “Today, I can ... report our plans for gross fleet investment in ‘22 of $550 million to $600 million. The investment represents the largest annual gross capital spend in the company’s 60-year history and suggests our confidence in a fundamentally robust cycle.”

H&E said the investment will also provide the equipment needed to support its growth initiative which began in 2021 when it added nine warm-start branch locations and one greenfield location in Kansas City, ending the year with 102 locations across 24 states. H&E did sell five branches in 2021 during the offloading of its crane business in October. 

For 2022, H&E plans to add no fewer than 10 locations across the U.S., further penetration existing markets, as well as expanding into new geographies.

“We have already begun the planned expansion with an opening of a new Fairburn, GA location expected early March, our sixth location in the state; and the expected opening of a greenfield location by the end of the first quarter, increasing our coverage to 25 states,” Barber noted. 

H&E said it experieinced higher average physical utilization and rental rate appreciation due to strong customer demand. Fourth quarter average physical utilization was 73.1%.

Addressing strong industry dynamics, Barber noted, “Favorable industry trends remain in place, providing abundant opportunities for growth in 2022. Of note, feedback from our customers suggests elevated equipment rental demand is likely to persist through 2022 with broadening activity in the non-residential construction and industrial end markets.

“Strong performance in 2021 of key industry measures of future construction activity support the likelihood for further expansion in 2022 of these important end markets. In addition, the recently passed Bipartisan Infrastructure Bill is expected to supplement demand for our fleet as our customers outline growing needs in 2022 ahead of government appropriation.

“Finally, the planned growth of our equipment rental fleet in 2022 underscores our confidence in a fundamentally robust cycle. Following 2021 gross capital expenditures of $437 million, gross expenditures in 2022 are expected to range from $550 million to $600 million, representing the largest annual gross spend in the Company’s history.

“The spending increase of near 40% year-over-year is expected to position H&E to meet intensified customer demand in 2022 and beyond.”