H&E Rentals reports third quarter 2024 results with revenue off by 4%
Today, H&E Equipment Services, Inc. reported financial results for the third quarter, which ended on September 30, 2024. The report includes the Company’s branch expansion achievements, with the addition of eight new locations in the third quarter, expanding the Company’s branch network to 157 locations across 32 states. THIRD QUARTER 2024 SUMMARY WITH A COMPARISON TO THIRD QUARTER 2023 Revenues declined 4.0% to $384.9 million compared to $400.7 million. Net income was $31.1 million compared to $48.9 million. The effective income tax rate was 28.3% compared to 26.1%. Adjusted EBITDA totaled $175.3 million, a decrease of 8.4% compared to $191.4 million. Adjusted EBITDA margins were 45.6% of revenues compared to 47.8%. Total equipment rental revenues were $326.2 million, an increase of $10.4 million, or 3.3%, compared to $315.8 million. Rental revenues were $288.1 million, an increase of $7.8 million, or 2.8%, compared to $280.3 million. Rental equipment sales decreased 47.3% to $27.8 million compared to $52.7 million. Gross margin declined to 44.5% compared to 47.0%. Total equipment rental gross margins were 45.3% compared to 47.4%, and rental gross margins were 51.2% compared to 53.3%. Average time utilization (based on original equipment cost) was 67.6% compared to 70.0%. Based on original equipment cost, the Company’s rental fleet closed the third quarter of 2024 at slightly below $3.0 billion, an increase of $220.1 million, or 8.1%. Average rental rates declined 0.1% compared to the third quarter of 2023 and fell 0.6% compared to the second quarter of 2024. Dollar utilization was 39.4% compared to 41.5% in the third quarter of 2023 and 38.6% in the second quarter of 2024. The average rental fleet age on September 30, 2024, was 40.8 months, compared to an industry average of 47.9 months. Paid regular quarterly cash dividend of $0.275 per share of common stock. “Industry fundamentals in the third quarter continued to trail year-ago measures,” said Brad Barber, chief executive officer of H&E Rentals. “Physical fleet utilization averaged 67.6%, or 240 basis points below the third quarter of 2023, evidence of the lower customer demand and a lingering modest oversupply of equipment. On a sequential quarterly basis, utilization improved 120 basis points. In addition, rental rates declined 0.1% compared to the prior-year quarter and were down 0.6% from the second quarter of 2024. Despite weakness in these key metrics, rental revenues grew 2.8% compared to the year-ago quarter due largely to the steady expansion of our branch count since the close of the third quarter of 2023. Finally, gross fleet expenditures in the quarter were $131.3 million, resulting in gross expenditures through the first nine months of 2024 of $327.8 million. We concluded the third quarter with a fleet original equipment cost of slightly below $3.0 billion.” Mr. Barber acknowledged the Company’s impressive expansion achievements, noting, “A record number of eight branches were added in the third quarter, while a ninth branch was opened in the month of October. The strong outcome reflected the outstanding execution of our accelerated new location program, which has achieved a record 16 additional locations in 2024, exceeding our stated expansion expectation. Through September 30, 2024, our U.S. geographic coverage improved to 157 locations across 32 states. When accounting for both new locations and branches added through acquisition, our branch count is up more than 14% in 2024 and approximately 54% since the close of 2021. Both measures are dominant accomplishments in our industry.” With the final quarter of 2024 underway, Mr. Barber provided updated expectations for the rental equipment industry, stating, “Construction spending in the U.S. continues to demonstrate the slowing rate of growth observed over the first half of 2024. We believe a trend of moderating activity will persist through the remainder of the year, with physical fleet utilization and rental rates below year-ago measures. Beyond the fourth quarter, the developing outlook for our industry is more encouraging into 2025. The Dodge Momentum Index (DMI), a leading indicator of construction spending, has exhibited gains for five of the last six months, while construction employment remains on a steady upward trajectory. Also, a cycle of easing interest rates is expected to have positive implications for local construction activity as projects are reevaluated under more favorable lending conditions. Finally, the strong expansion of mega-projects remains a significant growth driver for our industry, both today and in the future. Our branch expansion has led to greater and more diverse exposure to mega projects, including a growing presence on data centers, solar and wind farms, and LNG export facilities.” FINANCIAL DISCUSSION FOR THIRD QUARTER 2024 Revenue Total revenues were $384.9 million in the third quarter, a decline of 4.0% compared to $400.7 million in the third quarter of 2023. Total equipment rental revenues of $326.2 million improved 3.3% compared to $315.8 million in the third quarter of 2023. Rental revenues of $288.1 million increased 2.8% compared to $280.3 million in the third quarter of 2023. Rental equipment sales totaled $27.8 million, a decrease of 47.3% compared to $52.7 million in the third quarter of 2023. New equipment sales of $14.1 million increased 11.2% compared to $12.6 million in the same quarter of 2023. Gross Profit Gross profit totaled $171.5 million in the third quarter of 2024, a decrease of 9.0% compared to $188.4 million in the third quarter of 2023. Gross margin declined to 44.5% for the third quarter of 2024 compared to 47.0% for the same quarter in 2023. On a segment basis, the gross margin on total equipment rentals was 45.3% in the third quarter of 2024 compared to 47.4% in the third quarter of 2023. Rental margins were 51.2% compared to 53.3% over the same comparison period. Rental rates in the third quarter of 2024 declined 0.1% compared to the third quarter of 2023. Time utilization (based on original equipment cost) was 67.6% in the third quarter of 2024 compared to 70.0% in the third quarter of 2023. Gross margins on rental equipment sales improved to 60.2% in the third quarter of 2024 compared to 58.5% in the third quarter of 2023. Gross margins on new equipment sales were 19.8% in the third quarter of 2024 compared to
Herc Holdings reports Nine Months 2024 results and updates 2024 Full Year Guidance
Record equipment rental revenue of $866 million, an increase of 13% Record total revenues of $965 million, an increase of 6% Rental pricing increased 2.3% year-over-year M&A and greenfield openings offset the impact of decelerating local-market revenue growth Net income increased 8% to $122 million, or $4.28 per diluted share Adjusted EBITDA of $446 million increased 9%; adjusted EBITDA margin of 46.2% Free cash flow of $218 million for the nine months ended September 30, 2024 Herc Holdings Inc. has reported financial results for the September 30, 2024 quarter. “In the third quarter, we significantly outpaced overall industry growth on both a total rental revenue basis and from an organic revenue perspective,” said Larry Silber, president and chief executive officer. “By capitalizing on our broad end-market coverage, diversified product and services offering, and expanding share in resilient urban markets, we continue to deliver strong volume and a solid price/mix performance. “We increased third quarter rental revenue by 13% to a new quarterly record, primarily reflecting the continued robust growth from mega projects and contributions from our increased branch network and recent acquisitions. This growth was achieved despite a tough year-over-year comparison and a challenging interest rate environment for local project starts,” said Silber. “As we manage the complexities of disparate levels of demand across geographies, end markets, and project types, our team is agile and remains focused on aligning costs and balancing fleet while continuing to support the growth of our business and deliver outstanding customer service.” 2024 Third Quarter Financial Results Total revenues increased 6% to $965 million compared to $908 million in the prior-year period. The year-over-year increase of $57 million was primarily related to an increase in equipment rental revenue of $101 million, reflecting positive pricing of 2.3% and increased volume of 10.7%. Sales of rental equipment decreased by $43 million during the period. Fleet rotation in the prior-year period was accelerated due to the easing of supply chain disruptions in certain categories of equipment. Dollar utilization increased to 42.2% in the third quarter compared to 42.1% in the prior-year period. Direct operating expenses were $334 million, or 38.6% of equipment rental revenue, compared to $288 million, or 37.6% in the prior-year period. The increase related primarily to the business’s growth, with personnel and facilities costs associated with greenfields and acquisitions. Rental equipment depreciation increased by 4% to $174 million due to a higher year-over-year average fleet size. Non-rental depreciation and amortization increased 14% to $33 million, primarily due to the amortization of acquisition intangible assets. Selling, general, and administrative expenses were $123 million, or 14.2% of equipment rental revenue, compared to $115 million, or 15.0%, in the prior-year period due to the continued focus on improving operating leverage while expanding revenues. Interest expense increased to $69 million compared with $60 million in the prior-year period due to increased borrowings primarily to fund acquisition growth and investment in rental equipment. Net income was $122 million compared to $113 million in the prior-year period. Adjusted net income increased 9% to $124 million, or $4.35 per diluted share, compared to $114 million, or $4.00 per diluted share, in the prior-year period. The effective tax rate was 24% compared to 23% in the prior-year period. Adjusted EBITDA increased 9% to $446 million compared to $410 million in the prior-year period, and adjusted EBITDA margin was 46.2% compared to 45.2% in the prior-year period. 2024 Nine Months Financial Results Total revenues increased 7% to $2,617 million compared to $2,450 million in the prior-year period. The year-over-year increase of $167 million was primarily related to an increase in equipment rental revenue of $229 million, reflecting positive pricing of 3.5% and increased volume of 8.4%, partially offset by an unfavorable mix driven primarily by inflation. Sales of rental equipment decreased by $63 million during the period. Fleet rotation in the prior year period was accelerated due to the easing of supply chain disruptions in certain categories of equipment. Dollar utilization increased to 41.0% compared to 40.8% in the prior-year period. Direct operating expenses were $967 million, or 41.1% of equipment rental revenue, compared to $851 million, or 40.1% in the prior-year period. The increase is primarily related to the business’s growth and personnel and facilities costs associated with greenfields and acquisitions. Additionally, delivery expenses were higher due to internal equipment transfers to branches in higher-growth regions to drive fleet efficiency. Finally, insurance expenses increased, primarily related to increased self-insurance reserves due to claims development attributable to unsettled cases. Rental equipment depreciation increased by 4% to $499 million due to a higher year-over-year average fleet size. Non-rental depreciation and amortization increased by 11% to $92 million, primarily due to the amortization of acquisition intangible assets. Selling, general, and administrative expenses were $358 million, or 15.2% of equipment rental revenue, compared to $332 million, or 15.7%, in the prior year due to the continued focus on improving operating leverage while expanding revenues. Interest expense increased to $193 million compared with $162 million in the prior-year period due to increased borrowings primarily to fund acquisition growth and investment in rental equipment. Net income was $257 million compared to $256 million in the prior-year period. Adjusted net income increased 2% to $265 million, or $9.30 per diluted share, compared to $260 million, or $9.03 per diluted share, in the prior-year period. The effective tax rate was 23% compared to 21% in the prior-year period. Adjusted EBITDA increased 7% to $1,145 million compared to $1,070 million in the prior-year period, and adjusted EBITDA margin was 43.8% compared to 43.7% in the prior-year period. Rental Fleet Net rental equipment capital expenditures were as follows (in millions): Nine Months Ended September 30, 2024 2023 Rental equipment expenditures $ 753 $ 1,100 Proceeds from disposal of rental equipment (198 ) (231 ) Net rental equipment capital expenditures $ 555 $ 869 As of September 30, 2024, the Company’s total fleet was approximately $7.1 billion at OEC. The average fleet at OEC in the third quarter increased by 12% compared to the prior-year period. The average
Mid-Week dates and return of Future of Equipment Rental Planned for The ARA Show 2025
The ARA Show will return to the Las Vegas Convention Center in 2025, featuring a mid-week schedule and the Future of Equipment Rental. Registration for The ARA Show 2025 opens Tuesday, September 24. Register early to benefit from incentive pricing through October 8 and advance pricing through January 26. The American Rental Association’s (ARA) annual trade show is a can’t miss event for those looking to discover what’s next in rental. The trade show has a few twists in store with a shift to a mid-week schedule in 2025 and the return of Future of Equipment Rental. The schedule kicks off with Future of Equipment Rental on Tuesday, January 28; a full day of education sessions planned for Wednesday, January 29; and a three-day trade show will take place from Thursday, January 30 to Saturday, February 1. “We are excited to introduce a change in schedule for The ARA Show 2025 that will better accommodate our members and prospective members as they plan for a successful year ahead,” says Christine Hammes, Vice President of Association Services and Events. “The ARA Show continues to raise the bar on expectations each year, providing an unmatched combination of education sessions, networking opportunities, and a trade show that showcases the latest and greatest products and services for rental businesses.” Future of Equipment Rental — a full-day education and networking workshop for those in equipment rental — will be held on January 28. After a successful debut in 2023, the workshop returns with speakers and sessions focused on new technology and emerging trends for any size rental business. Future of Equipment Rental takes place one day before the start of The ARA Show and requires a separate registration fee. The ARA Show 2025 officially kicks off with a full day of education on Wednesday, January 29. The mid-week date is a change from the traditional schedule, but we will continue to offer exceptional sessions focusing on various relevant topics for rental professionals at every level. David Pogue will deliver the Keynote Session on Thursday, January 30. A technology expert and speaker, Pogue is a New York Times bestselling author of “Pogue’s Basics,” a series of essential tips and shortcuts, as well as several books in the “For Dummies” series and the “Missing Manual” series of computer books. He has been at the forefront of new and emerging tech trends for decades and will leave Keynote Session attendees informed about the state of science and technology today and how it’s shaping our future. The trade show floor will open immediately following the Keynote Session for two and a half days of product introductions and the latest innovations. An outdoor exhibit area will be located in the Diamond Lot next to the Convention Center West Hall. It provides space for equipment demonstrations and will include special attractions, food trucks, and more. Other featured networking events held throughout The ARA Show 2025 include the ARA’s Industry Awards Lunch, Regional Receptions, Breakfast hosted by Women in Rental, ARA Young Professionals Cocktails & Contacts, and The ARA Show Opening Reception, which will take place on Thursday, January 30. Advanced registration and ticket requirements may apply to select networking events. For complete show details, including registration and pricing information, visit ARAshow.org.
As the rental, financial and technology markets change, is your dealership?
Much is going on that impacts OEMs, Equipment Dealers, Financing Sources, and Customers. Inflation, supply chain disruptions, and geopolitical tension lead to cautious customer behavior, thus creating new levels of management manipulation to keep the ships upright. In addition to these significant disruptive sources, you add the risk associated with technology decisions, not only for your company but also for a high percentage of your customer base familiar with emerging technologies. Here are just a few concerns dealers have on their minds: Revenue per employee Tariffs Tax opportunities Overtime Regs On-shoring Near-shoring AI and IT for manufacturers AI and IT for warehouse and distribution centers Having products and services to fit the needs of manufacturers and distributors Finding other programs and methods to increase sales. Providing consulting services to customers. Emerging Technology Electrification Hydrogen cells Inventory changes and management. Supply chain disruption Collateral value of equipment Planning for rental income to represent a higher % of sales. Resale value uncertainty Bank and Financial source education Programs to find and keep personnel Cybersecurity threats Supply chain management Need for more dealer consolidation Quarterly cash flow requirements Cap-X for AI, IT, and customer consulting And I am sure you are also trying to hire to fill talent needs throughout your organization. And how about those equipment prices? Used values are falling, leaving you with the problem of having high-priced pandemic units now dropping in price and a collateral problem with the banks. And let us not forget the new elephant in the room….AI. Making an AI decision can be high risk if you do not know what you are doing, so MHW is premiering a new column next month to help with the process. And as far as your sales silo is concerned, you will be adding new accounts to track new types of equipment, including automated guided vehicles, and different types of fuel sources being offered, such as electric trucks using lithium-ion batteries as well as hydrogen fuel cells. We can all agree that customers will look to YOU to provide insight into what type of unit best fits their needs. I have heard hydrogen is growing its market share because it is cheaper and avoids the “green costs” associated with mining and disposing of lithium. All these issues have produced some interesting discussions with bankers. CEO and shareholder anxiety must be the name of the game regarding the balance of 2024. As I have said in the past, if you are not ready or able to roll with the punches and make the investments necessary to stay in the game, it may be time to investigate transitioning out of the industry. Consolidation is taking place in all types of markets, with equipment dealers and rental companies appearing in every business publication I read. One final option before pulling the plug is to find and hire a manager prepared to deal with the issues at hand. On the FINANCING side of the business, banks and finance companies are having their own problems because many customers are experiencing cash flow challenges, resulting in payment delays to either the bank or dealer. Credit risks are also increasing because of economic uncertainty affecting dealers and customers. Having numerous financing sources available is a must for today’s markets. Financing sources are asked to finance unfamiliar new types of equipment for both the dealer and customers. Lenders must contend with the value of what is currently on their balance sheet instead of financing new equipment types with which they have zero history of working. Consequently, dealers should prepare examples of the expected values of the equipment over at least a five-year period. Dealers should prepare an annual equipment appraisal covering used equipment inventory and rental units. I also suggest you track the sales of your used equipment and compare the sales price to what appears in the valuation report. If you can show the bank that you are selling used equipment for more than what appears in the valuation report, the bank will rely more on the report when considering your credit requests. Remember that many buyers are waiting for interest rates to be reduced before purchasing new or used equipment. If so, sales will be deferred, reducing the cash flow to finance the business. I see that rental activity is increasing rather than purchasing units, eventually impacting dealer cash flow and borrowing capacity. Dealers will have little say in how all this works out. Changes in emerging technology and advancements in warehouse automation and shop floors will dictate what lift truck dealers must provide. The trick will be eliminating the old, bringing in the new, and becoming more efficient using the latest technology and AI (if it works for you). Cash flow schedules incorporating these changes should be adjusted and updated quarterly to stay ahead of the game—notice I said cash flow schedules, not budgeting worksheets. In the end, the revenue silos will produce less profits and cash flow, and dealers need to be prepared to deal with this situation. On the other hand, you may be selling more technical equipment and systems that make up for reductions in other sale categories. Change is coming faster than you think. Be prepared to produce a company ready to provide products and services and consulting to the ever-changing manufacturing and distribution world you will be living in. About the Columnist: Garry Bartecki is a CPA MBA with GB Financial Services LLC and a Wholesaler columnist since August 1993. E-mail editorial@mhwmag.com to contact Garry.
ARA’s US & Canada third-quarter economic forecast released
In its updated forecast, the American Rental Association (ARA) indicates that the United States equipment rental industry’s 2024 growth projection indicates softening. The most current projections indicate an 8.9% revenue increase in 2024, totaling $78.7 billion in construction and general tool rental revenue, and a 5.3% growth in 2025. This is a decrease from last quarter’s projected 9.7% increase, totaling $79.2 billion. Broken down by segment, construction and industrial rental revenue (CIE) is projected to be $62.3 billion, and general tool rental revenue is expected to total $16.4 billion. “While the rental industry and opportunities continue to expand, we are experiencing softer growth,” states Tom Doyle, ARA vice president of program development. “The ARA quarterly survey results confirm this softening.” “The forecast for construction and industrial has not changed much since last quarter, perhaps a few tenths of basis points, but there has been more change to general tool,” says Scott Hazelton, managing director at S&P Global. “The market is still doing well but slowing. Next year’s GDP growth is lower than trend at 1.6% growth, the trend is around 2.1%. The overall view of rental is positive moving forward, but there is uncertainty out there.” Kurt Barney, president of Vandalia Rental, Vandalia, Ohio, adds, “Largely what we’re seeing is softening growth as well. We’re seeing pricing elasticity. It’s no longer, ‘Do you have it?’ We’re back to doing business like 2019 when we have to really communicate the value proposition of working with us.” Barney also says, “We’re balancing rate pressures, supply chain, and mix of the fleet in a softening environment, especially on the earthmoving side. As interest rates begin to decline, I think it will take some of the projects off the sidelines. The quarter and half points have a huge impact on those projects. The rental model and proposition has never been stronger. It’s a good place to be.” The updated Canadian equipment rental revenue forecast shows a 6.6% growth, totaling $5.75 billion, compared to last quarter’s projection of 7.2% growth, totaling $5.79 billion. Broken down by segment, general tool and construction and industrial equipment (CIE) are expected to grow. Canadian general tool revenue this year is projected to be 6.8%, $1.08 billion, and Canadian CIE revenue in 2024 is projected to be $4.67 billion. Rob Wilson, chief operating officer of Stephenson’s Rental Services, Mississauga, Ontario, says, “What we’re seeing across our markets is pretty slow, but Stephenson’s is still growing. It’s a mixed bag. Residential activity represents 60% to 65% of those markets, and that activity is down.” Wilson is optimistic that the latter half of 2025 will be very strong. The 2025 projection for Canada’s combined rental revenue is $6.14 billion, a 6.7% year-over-year growth. Broken down by segment that equals $1.14 billion in general tool rental revenue and $5 billion in CIE rental revenue. “I wouldn’t characterize Canada’s economy as robust, but CIE is one of the strongest investments in particular,” says Hazelton. “We do expect the economy to get stronger as a whole by 2027.” What’s driving this forecast? S&P Global believes that interest rates will not come down until December, despite the chair of the Federal Reserve, Jerome Powell’s most recent testimony. Powell wants to see inflation stay under control before any moves are made. Hazelton also believes that when the cuts come, they will come slowly. “We [S&P Global] also see a downshift in GDP from 2.4% growth this year to 1.6% growth next year,” says Hazelton.
H&E opens new branch in Cedar Rapids
Effective August 5, 2024, H&E Rentals (H&E) announces the opening of its Cedar Rapids branch, the company’s first general rental location in the state of Iowa. H&E now operates in 32 states, and it has opened 23 new branches across the country and acquired nine others since the second quarter of 2023. The facility is located at 1925 Blairs Ferry Road NE, Cedar Rapids, IA 52402-5811, phone 319-432-7100. It includes a fully fenced yard area, offices, and a repair shop and carries a variety of construction and general industrial equipment. “H&E’s expansion into Iowa adds another state to our Midwest operations and extends our reach farther north from our Columbia, Peoria, and St. Louis branches. Our territory covers the entire eastern half of Iowa, from the Illinois and Wisconsin border west to I-35. The newly renovated facility is just off I-380, and our proximity to Hwy 100 and other major roadways means we’re on our way to your job site quicker,” says Branch Manager Scott Pritchett. “We may be new to the Hawkeye State, but we’re certainly not new to the equipment rental business. H&E maintains one of the youngest fleets in the industry, and we look forward to establishing new relationships and showing customers how we can partner with them in their business.” The Cedar Rapids branch specializes in the rental of aerial lifts, earthmoving equipment, telescopic forklifts, compaction equipment, generators, light towers, compressors, and more and represents the following manufacturers: Allmand, Atlas Copco, Bomag, Case, Club Car, Cushman, Doosan, Gehl, Generac Mobile, Genie, Hamm, Hilti, Husqvarna, JCB, JLG, John Deere, Kobelco, Kubota, LayMor, Ledwell, Lincoln Electric, Link-Belt Excavators, MEC, Miller, Multiquip, Polaris, Sany, Skyjack, SkyTrak, Sullair, Sullivan-Palatek, Tag, Towmaster, Unicarriers, Wacker Neuson, Yanmar, and others.
H&E opens new branch near Idaho Falls, SD
Effective July 15, 2024, H&E Rentals (H&E) announces the opening of its Idaho Falls branch, the third general rental equipment location in the state of Idaho. H&E has opened 22 new branches across the country and acquired nine others in just over a year, and it has operations in 31 states. The facility is located at 2727 East 14th North, Ammon, ID 83401-6232, phone 208-977-0900. It includes a fully fenced yard area, offices, and a repair shop and carries a variety of construction and general industrial equipment. “H&E has extended its coverage in Idaho and across the Wyoming state line to easily service projects that are a farther reach for our branches in Boise, Belgrade, Montana, and Ogden, Utah. Our Idaho Falls branch has filled in those gaps between our other H&E facilities in the region, and we can now work in tandem to take care of our customers across several states,” says Branch Manager Josh Criddle. “We’ve added greater fleet availability to the area, and the location of our new facility has quick access to I-15 and roadways that branch off in all directions, so we can get equipment moving to job sites without delay.” The Idaho Falls branch specializes in the rental of aerial lifts, earthmoving equipment, telescopic forklifts, compaction equipment, generators, light towers, compressors, and more and represents the following manufacturers: Allmand, Atlas Copco, Bomag, Case, Club Car, Cushman, Doosan, Gehl, Generac Mobile, Genie, Hamm, Hilti, Husqvarna, JCB, JLG, John Deere, Kobelco, Kubota, LayMor, Ledwell, Lincoln Electric, Link-Belt Excavators, MEC, Miller, Multiquip, Polaris, Sany, Skyjack, SkyTrak, Sullair, Sullivan-Palatek, Tag, Towmaster, Unicarriers, Wacker Neuson, Yanmar, and others.
Herc Rentals acquires Durante Rentals
Herc Rentals, Bonita Springs, Fla., has acquired Durante Rentals, New Rochelle, N.Y. Durante Rentals has provided construction equipment rentals and sales to customers across the New York tri-state area since its establishment in 2009. In May 2023, Durante Rentals acquired the Iron Source brand, enabling the company to expand its reach into the mid-Atlantic market through Iron Source’s Delaware locations. In 2024, Durante Rentals operated six locations under the Durante Rentals brand across New York and New Jersey and four locations under the Iron Source brand in Delaware. Durante Rentals was founded by cousins Anthony Durante and John Durante in 2009. The Durante cousins grew up in the rental business as their respective parents had run a rental business since the 1970s, known as Durante Equipment, which was acquired by United Rentals in 2000. Anthony and John worked briefly for United Rentals before going their separate ways in different businesses, eventually reuniting to found Durante Rentals, starting in a trailer their fathers’ original company had used alongside a Bronx Expressway leading to the entrance to the Whitestone Bridge. John Durante left the company in 2019 and founded Durante Equipment in Hollywood, Fla. Herc’s acquisition of Durante Rentals comes on the heels of Durante Rentals being named one of Rental Management’s 2024 Market Movers in the category of fastest-growing independent equipment rental companies with more than $10 million in annual revenue.
REIC acquires Bigfork Rentals
Rental Equipment Investment Corp. (REIC), a portfolio company of Kinderhook Industries, LLC, has announced its acquisition of Bigfork Rentals, Inc., based in Kalispell, Montana. This move is part of REIC’s strategic aim to expand its footprint in Montana, enhancing its rental equipment offerings and market presence. Kinderhook Industries, known for its focus on middle-market businesses, supports REIC in leveraging growth opportunities within the equipment rental sector. By integrating Bigfork Rentals into its operations, REIC aims to bolster its service capacity and customer reach in the region. Bigfork represents REIC’s ninth add-on acquisition under Kinderhook’s ownership and its 21st since inception. Financial terms of the transaction were not disclosed. Greg Gallagher, REIC CEO, said: “Bigfork has established a reputation for providing high-quality equipment and service. The acquisition enhances REIC’s presence in Flathead and Lake counties in Montana, enabling us to better serve our customers in the region.” “I am excited to have completed the sale of the company to REIC,” said Steve Ricci, Bigfork owner. “I want to thank all of our employees and customers for their work and loyalty over the years to build Bigfork into what it is today. I also want to thank the rental industry for all their support and for the opportunity to serve their members.” “The geographic proximity of Bigfork to our other general rental locations makes this acquisition highly strategic for REIC as we continue to build density,” said Paul Cifelli, managing director, of Kinderhook. “We are excited for REIC to continue its acquisitive track record that has established the business as the partner of choice in the ongoing consolidation of the equipment rental industry.” Caldera Law served as legal counsel to REIC. Financing for the transaction was provided by a syndicate led by PNC Bank, National Association with participation from Flagstar Bank, N.A., Axos Bank, BancAlliance Inc., Bank Hapoalim B.M., First Merchants Bank, U.S. Bank National Association, Stifel Bank, MUFG Bank, Ltd., Capital One, National Association.
H&E opens new branch in Columbus Ohio
Effective June 24, 2024, H&E Rentals (H&E) announces the opening of its Columbus branch, the company’s first general rental location in the state of Ohio. H&E now operates in 31 states, and it has opened 21 new branches across the country and acquired nine others in just over a year. The facility is located at 2845 Fisher Road, Columbus, OH 43204-3539, phone 614 407-9900. It includes a fully fenced yard area, offices, and a repair shop and carries a variety of construction and general industrial equipment. “H&E’s expansion into central Ohio increases our presence in the Midwest, and our location in Columbus provides reach to a wide radius of projects across the state. We have assembled a diverse fleet and have the resources to serve customers extending to Dayton, Lima, Mansfield, Wooster, Cambridge, Parkersburg, Chillicothe, and all points in between. Our new facility is just off I-70, and our proximity to I-670, I-71, I-270, and other major roadways means that we can move rental equipment to job sites quickly and efficiently,” says Branch Manager Perry Rice. “We may be new to the Buckeye State, but we’re certainly not new to the equipment rental business. We look forward to establishing new relationships and showing customers our higher standard of service.” The Columbus branch specializes in the rental of aerial lifts, earthmoving equipment, telescopic forklifts, compaction equipment, generators, light towers, compressors, and more and represents the following manufacturers: Allmand, Atlas Copco, Bomag, Case, Club Car, Cushman, Doosan, Gehl, Generac Mobile, Genie, Hamm, Hilti, Husqvarna, JCB, JLG, John Deere, Kobelco, Kubota, LayMor, Ledwell, Lincoln Electric, Link-Belt Excavators, MEC, Miller, Multiquip, Polaris, Sany, Skyjack, SkyTrak, Sullair, Sullivan-Palatek, Tag, Towmaster, Unicarriers, Wacker Neuson, Yanmar, and others.
Sunbelt Rentals acquires ABC Equipment Rental
Sunbelt Rentals has acquired ABC Equipment Rental, a multi-branch independent equipment rental provider in the Baltimore and Washington D.C. markets. “We are pleased to join forces with the Sunbelt Rentals team,” said Lee Lightner, President of ABC Equipment Rental. “Sunbelt’s national brand, extensive general tool and specialty equipment fleet, and deep roots in the Baltimore and Washington markets will make this a great combination for our customers and employees.” Catalyst Strategic Advisors served as the exclusive transaction advisor to ABC Equipment Rental.
H&E Equipment Services completes acquisition of Lewistown Rental and affiliated companies
H&E Equipment Services, Inc. has announced the completion of its acquisition of Montana-based Lewistown Rental and three of its affiliated companies located in Havre, Glasgow, and Great Falls, Montana. The acquisition adds a comprehensive mix of equipment with an original equipment cost of approximately $28.5 million. Brad Barber, chief executive officer of H&E, stated, “With the addition of these four locations, H&E now has six locations in the state of Montana, addressing customer needs across the state. The acquisition is our third in the last six months and is indicative of our continued focus on expanding our geographic reach in the U.S. We are encouraged by the growing prospects for non-residential, industrial, infrastructure, and agricultural projects in Montana and look forward to establishing a strong presence in this vibrant state.” With the close of the transaction, H&E now operates 145 branch locations across 30 states.
H&E Equipment Services reports first quarter 2024
H&E Equipment Services, Inc. announced results for the first quarter ended March 31, 2024, with disciplined growth objectives contributing to double-digit improvement in rental revenues. FIRST QUARTER 2024 SUMMARY WITH A COMPARISON TO FIRST QUARTER 2023 Revenues increased 15.2% to $371.4 million compared to $322.5 million. Net income totaled $25.9 million compared to $25.7 million. The effective income tax rate was 26.5% compared to 26.1%. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increased 13.1% to $161.7 million compared to $143.0 million. Adjusted EBITDA margin was 43.6% compared to 44.4%. Total equipment rental revenues were $295.3 million, an increase of $33.3 million, or 12.7%, compared to $262.0 million. Rental revenues were $261.7 million, an increase of $29.7 million, or 12.8%, compared to $232.1 million. Sales of rental equipment increased 49.8% to $48.1 million compared to $32.1 million. Margins improved to 62.9% compared to 58.6%. Sales of new equipment totaled $10.4 million, an increase of 33.2% compared to $7.8 million. Gross margin improved to 44.4% compared to 43.8%. Total equipment rental gross margins were 43.3% compared to 43.6%. Rental gross margins were 48.5% compared to 48.4%. Average time utilization (based on original equipment cost) was 63.6% compared to 67.3%. The Company’s rental fleet, based on original equipment cost, increased $383.0 million, or 15.7% to just over $2.8 billion. Average rental rates improved 2.9% from the year-ago quarter and declined 0.2% on a sequential quarterly basis. Dollar utilization was 37.0% compared to 38.6%. Average rental fleet age on March 31, 2024, was 39.9 months compared to an industry average age of 48.9 months. Paid regular quarterly cash dividend of $0.275 per share of common stock. Summarizing the Company’s first quarter results, Brad Barber, chief executive officer of H&E stated, “Rental revenues grew 12.8% on a year-over-year basis, supported by a modest improvement in rental rates and successful growth activities. Rental rates advanced 2.9% when compared to the year-ago quarter, while on a sequential quarterly basis, rates experienced a negligible decrease of 0.2%. Average physical utilization in the quarter was 63.6% compared to 67.3% in the year-ago quarter, with the decline due to lower than anticipated construction activity, as well as project delays resulting from recurring unfavorable weather conditions, with the work interruptions most pronounced across our western operations. Our continued focus on branch expansion and fleet growth led to further financial gain in the quarter. On a year-over-year basis, our branch network grew 17%, including 15 locations resulting from our accelerated branch expansion program and five other locations added through acquisitions. Our rental fleet closed the first quarter with an original equipment cost (OEC) in excess of $2.8 billion, or 15.7% larger than our OEC on March 31, 2023.” Providing an updated view on industry prospects, Mr. Barber noted, “Our current outlook for the equipment rental industry indicates a transitioning business environment, with moderating growth levels compared to the exceptional rate of growth in construction spending and strong business dynamics experienced over the past 24 months. We believe the easing in the progression of construction spending is in part the result of a ‘higher for longer’ interest rate environment and generally tighter lending standards, which have contributed to a greater supply of rental equipment. Even though non-residential and industrial project backlogs remain solid, the rate of new project starts has slowed in early 2024. We note several factors that are expected to be instrumental in maintaining, or possibly improving upon an environment currently exhibiting moderate growth and steady industry fundamentals. These factors include the continued escalation of mega projects, an expected increase in infrastructure projects, favorable trends in rental penetration and the steady growth in construction employment. These critical factors reinforce non-residential construction and industrial project activity and serve as the foundation in support of elevated long-term industry growth.” Mr. Barber addressed the Company’s planned capital expenditures while reiterating branch expansion objectives, stating, “We have reduced our 2024 guidance for gross fleet investment, with the steadying of industry fundamentals justifying a more balanced approach to capital spending over the year. Capital investment in our fleet is now expected to range from $350 million to $400 million, down from our initial guidance for 2024 of $450 million to $500 million. With the availability of equipment from manufacturers returning to normal, we could quickly increase our spending range should industry demand accelerate. The revised spending range will adequately address the planned growth in 2024 across our branch network, which remains at 12 to 15 new locations as we continue to demonstrate strong execution of our accelerated branch expansion strategy. Also, additional branch growth in 2024 could be achieved through the acquisition of attractive rental operations, as demonstrated by the acquisition of Precision Rental, which closed in the first week of 2024, and the recently announced pending acquisition of four locations in the state of Montana. Following the expected close of this latest transaction in the second quarter of 2024, H&E will operate 145 branches across 30 states, including eight branch additions since the close of 2023.” FINANCIAL DISCUSSION FOR FIRST QUARTER 2024 Revenue Total revenues increased 15.2% to $371.4 million in the first quarter of 2024 from $322.5 million in the first quarter of 2023. Total equipment rental revenues increased 12.7% to $295.3 million compared to $262.0 million in the year-ago quarter. Rental revenues increased 12.8% to $261.7 million compared to $232.1 million in the same period of comparison. Sales of rental equipment increased 49.8% to $48.1 million compared to $32.1 million in the first quarter of 2023. Sales of new equipment increased 33.2% to $10.4 million compared to $7.8 million in the same quarter of 2023. Gross Profit Gross profit increased 16.6% in the first quarter of 2024 to $164.9 million compared to $141.4 million in the first quarter of 2023. Gross margin of 44.4% for the first quarter of 2024 compared to 43.8% over the same period of comparison. On a segment basis, gross margin on total equipment rentals was 43.3% in the first quarter of 2024 compared to 43.6% in the first quarter of 2023. Rental margins were 48.5% compared to 48.4%. On average, rental rates in the first quarter of 2024 improved 2.9% when compared to rates in the first quarter of 2023. Time utilization (based on original equipment cost) was 63.6% in the first quarter of 2024 compared to 67.3% in the year-ago quarter. Gross margins
Herc Holdings reports strong First Quarter 2024 and affirms 2024 full-year guidance
Record first quarter total revenues of $804 million, an increase of 9% Net income decreased 3% to $65 million, or $2.29 per diluted share Adjusted EBITDA of $339 million increased 10%; adjusted EBITDA margin increased to 42.2% Rental pricing increased 5.1% year-over-year Added 15 new locations through M&A and greenfield openings Corporate credit rating upgraded by S&P Global to BB Herc Holdings Inc. has reported financial results for the quarter ended March 31, 2024. “We are off to a strong start in 2024, achieving record first-quarter revenue and adjusted EBITDA margin as we continue to capitalize on key growth markets, like semiconductors, data centers, renewables, and public infrastructure, while also investing in our network scale through greenfields and acquisitions, and elevating our higher-return specialty product lines,” said Larry Silber, president and chief executive officer of Herc Rentals. “Once again, our teams are delivering for customers both in the local markets and at the national level, capitalizing on our broad geographic coverage and strong demand for our products and services. “We are making progress against each of our key 2024 priorities — enhancing our customer experience through our E3 business operating system, managing fleet efficiency and expenses with discipline, and scaling our network through greenfield locations and acquisitions in top 100 metropolitan markets,” said Silber. “Based on this strong performance and current line-of-sight to market trends, we are affirming our annual performance targets, excluding Cinelease, of 7-10% year-over-year equipment rental revenue growth and adjusted EBITDA of $1.55 billion to $1.60 billion for 2024.” 2024 First Quarter Financial Results Total revenues increased 9% to $804 million compared to $740 million in the prior-year period. The year-over-year increase of $64 million primarily related to an increase in equipment rental revenue of $65 million, reflecting positive pricing of 5.1% and increased volume of 8.0%, partially offset by unfavorable mix driven primarily by inflation. Sales of rental equipment decreased by $2 million during the period. Dollar utilization was 39.7% in the first quarter, flat over the prior-year period. Direct operating expenses were $307 million, or 42.7% of equipment rental revenue, compared to $281 million, or 43.0% in the prior-year period, reflecting better cost performance and fixed cost absorption on higher revenue despite increases related to additional headcount, facilities and maintenance expenses associated with strong rental activity and an expanding branch network. Depreciation of rental equipment increased 5% to $160 million due to higher year-over-year average fleet size. Non-rental depreciation and amortization increased 12% to $29 million primarily due to amortization of acquisition intangible assets. Selling, general and administrative expenses was $115 million, or 16.0% of equipment rental revenue, compared to $106 million, or 16.2% in the prior-year period due to continued focus on improving operating leverage while expanding revenues. Interest expense increased to $61 million compared with $48 million in the prior-year period due to increased borrowings on the ABL Credit Facility primarily to fund acquisition growth and invest in rental equipment and higher interest rates on floating-rate debt. Net income was $65 million compared to $67 million in the prior-year period. Adjusted net income decreased 3% to $67 million, or $2.36 per diluted share, compared to $69 million, or $2.35 per diluted share, in the prior-year period. The effective tax rate was 20% compared to 11% in the prior-year period. Adjusted EBITDA increased 10% to $339 million compared to $308 million in the prior-year period and adjusted EBITDA margin was 42.2% compared to 41.6% in the prior-year period. Continued focus on improving operating leverage while expanding revenues resulted in the improvement in margin year-over-year. Rental Fleet Net rental equipment capital expenditures were as follows (in millions): Three Months Ended March 31, 2024 2023 Rental equipment expenditures $ 181 $ 332 Proceeds from disposal of rental equipment (61) (49) Net rental equipment capital expenditures $ 120 $ 283 As of March 31, 2024, the Company’s total fleet was approximately $6.4 billion at OEC. Average fleet at OEC in the first quarter increased 10% compared to the prior-year period. Average fleet age was 47 months as of March 31, 2024 and 2023. Disciplined Capital Management The Company completed 4 acquisitions with a total of 11 locations and opened 4 new greenfield locations during the quarter. Net debt was $3.7 billion as of March 31, 2024, with net leverage of 2.5x which is unchanged from the same prior-year period. Cash and cash equivalents and unused commitments under the ABL Credit Facility contributed to $1.4 billion of liquidity as of March 31, 2024. The Company declared its quarterly dividend of $0.665, an increase of $0.0325 or 5%, paid to shareholders of record as of February 21, 2024 on March 7, 2024. Outlook The Company is affirming its full year 2024 equipment rental revenue growth, adjusted EBITDA, and gross and net rental capital expenditures guidance ranges presented below, excluding Cinelease studio entertainment and lighting and grip equipment rental business. The guidance range for the full year 2024 adjusted EBITDA reflects an increase of 6% to 9% compared to full year 2023 results, excluding Cinelease. The sale process for the Cinelease studio entertainment business is ongoing. Equipment rental revenue growth: 7% to 10% Adjusted EBITDA: $1.55 billion to $1.60 billion Net rental equipment capital expenditures after gross capex: $500 million to $700 million, after gross capex of $750 million to $1 billion As a provider in an industry where scale matters, the Company expects to continue to gain share by capturing an outsized position of the forecasted higher construction spending in 2024 by investing in its fleet, optimizing its existing fleet, capitalizing on strategic acquisitions and greenfield opportunities, and cross-selling a diversified product portfolio.
H&E opens new branch in the Decatur AL area
Effective April 1, 2024, H&E Rentals (H&E) announces the opening of its Decatur branch, the sixth general rental equipment location in the state of Alabama. Since the second quarter of 2023, H&E has opened 16 new branches across the country and acquired five others. The facility is located at 930 Old Trinity Road, Trinity, AL 35673-6556, phone 256 916-2900. It includes a fully fenced yard area, offices, and a repair shop and carries a variety of construction and general industrial equipment. “The location of our Decatur branch complements our existing facility in Huntsville, just 20 miles to the east. Our territory now provides even greater coverage to northwest Alabama, extending over to Mississippi and also reaching above the state line into Tennessee and down along I-65 and I-22. We can serve customers in Decatur, Athens, Hartselle, Vinemont, Hamilton, Russellville, and Florence, as well as Lewisburg and Pulaski, Tennessee, and points in between,” says Branch Manager Josh Benner. “By having several H&E facilities within reach, we can source equipment from an expanded fleet and provide the specific unit that is needed for any job, including pump and power products from our Birmingham (Specialty) location. The Decatur branch specializes in the rental of aerial lifts, earthmoving equipment, telescopic forklifts, compaction equipment, generators, light towers, compressors, and more and represents the following manufacturers: Allmand, Atlas Copco, Bomag, Case, Club Car, Cushman, Doosan, Gehl, Generac Mobile, Genie, Hamm, Hilti, Husqvarna, JCB, JLG, John Deere, Kobelco, Kubota, LayMor, Ledwell, Lincoln Electric, Link-Belt Excavators, MEC, Miller, Multiquip, Polaris, Sany, Skyjack, SkyTrak, Sullair, Sullivan-Palatek, Tag, Towmaster, Unicarriers, Wacker Neuson, Yanmar, and others.
Cooper Equipment Rentals acquires Action Equipment Rentals
Cooper Equipment Rentals Limited has acquired 100 percent of the shares of Red Deer, Alberta-based Action Equipment Rentals Inc. Action was formed in 1991 by Reginald Bloomfield and his father Ray Bloomfield in Sundre, Alberta, to serve the Central Alberta market. The company opened a second location in Red Deer about a year later. In 2015, Action consolidated operations in Red Deer, and under the leadership of general manager Gabriel Castella-Chin embarked on an ambitious plan to renew the rental fleet and grow the company’s market share. Action’s focus has always been to “put customers first,” which aligns perfectly with Cooper’s core values. “Joining a Canadian-owned company with an excellent reputation was important in our decision to join the Cooper family,” said Castella-Chin. “We are looking forward to continuing to serve Central Alberta with the benefits and resources that allow us to expand our presence and continually improve our already excellent service.” “Action’s prime location and facility in Red Deer intensifies our coverage in the important Alberta market and their strong presence in Alberta enhances our ability to serve customers better in Western Canada,” said Lee Briscoe, regional manager, of Cooper Equipment Rentals. “I was once told that if you build it, they will come,” said Reginald Bloomfield, founder, of Action Rentals. “That was our charge for Action Rentals from the start, and this is the next natural step going forward. Cooper will take what we built and continue to build so they will come. And if we treat them right, they will stay.” Action joins Cooper as the Red Deer branch and will continue to be led by Gabriel Castella-Chin, supported by a team of experienced, loyal, and dedicated Action employees. “Action has built a fine business with a reputation for quality and integrity in the construction equipment industry, and we are proud to welcome them into the Cooper family as we continue to grow our company across Canada,” said Doug Dougherty, CEO, of Cooper Equipment Rentals.
Herc Rentals acquire MAC Equipment
Herc Rentals has acquired MAC Equipment in Albany, NY from Rob and Janice Miller. MAC Equipment was founded in 2001 by Rob Miller who rented aerial, forklifts, and telehandlers. Janice Miller joined the business in 2005. Janice Miller, Owner and Managing Member of MAC Equipment, LLC was elected President of the Northeastern Subcontractors Association (NESCA) for the 2021-2022 term. As of July 1, Janice has been serving as the 49th president of the association. Following several years of service on NESCA’s Board of Directors, she previously served as NESCA’s vice president and treasurer. In 2012 Janice became the majority owner of MAC Equipment, a certified WBE and DBE in New York, Massachusetts, and Vermont as well as a WBE in New York City, the Port Authority, and the City of Albany.
The ARA Show heads west to Las Vegas in 2025
Next year, The ARA Show™ will head back to Las Vegas and the Las Vegas Convention Center. A full day of education will begin the show on Wednesday, Jan. 29, followed by the three-day trade show from Thursday, Jan. 30, through Saturday, Feb. 1. Future of Equipment Rental will return in 2025 and take place on Tuesday, Jan. 28 As planning begins for 2025, attendees and exhibitors should note the change in days of the week from a typical show to the Wednesday-Saturday schedule the show will be on in Las Vegas. The desert of Las Vegas has been a long-time favorite for attendees with the fun, nightlife, and bright lights of the city. Las Vegas continues to grow in excitement and the American Rental Association (ARA) looks forward to bringing the show back to Vegas in 2025, following a successful return in 2021. More details about The ARA Show 2025 will be available in the coming months. Check out ARAshow.org and the show’s social media channels for the latest information.
H&E Equipment Services report Fourth Quarter and Full Year 2023 results
H&E Equipment Services, Inc. has announced results for the fourth quarter and full year ended December 31, 2023, with record strategic expansion, impressive revenue growth, and steady margin appreciation contributing to another year of record financial performance. On October 1, 2021, the Company sold its crane business, (the “Crane Sale”). All results and comparisons for the periods reported are presented on a continuing operations basis with the Crane Sale reported as discontinued operations in certain statements and schedules accompanying this report. Also, on December 15, 2022, the Company sold its Komatsu earthmoving distribution business, resulting in a pre-tax gain of $15.4 million in the fourth quarter of 2022, including $12.9 million recorded as a gain on the sale of property and equipment, and $2.5 million as a gain on other, net. FOURTH QUARTER 2023 SUMMARY WITH A COMPARISON TO FOURTH QUARTER 2022 Revenues increased 9.3% to $385.8 million compared to $353.1 million. Net income totaled $53.5 million compared to $51.2 million. The effective income tax rate was 19.4% compared to 26.1%. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increased 6.5% to $185.2 million compared to $173.9 million. Prior year results included the pre-tax gain associated with the sale of the Komatsu earthmoving distribution business. Adjusted EBITDA margin was 48.0% compared to 49.2%. Total equipment rental revenues were $316.9 million, an increase of $41.2 million, or 14.9%, compared to $275.7 million. Rental revenues were $280.6 million, an increase of $35.6 million, or 14.5%, compared to $245.0 million. Sales of rental equipment increased 34.3% to $40.6 million compared to $30.2 million. Margins improved to 66.0% compared to 51.2%. Sales of new equipment totaled $9.8 million, a decline of 54.5% compared to $21.5 million. Gross margin improved to 48.3% compared to 45.1%. Total equipment rental gross margins were 48.2% compared to 47.9%. Rental gross margins were 54.2% compared to 53.1%. Average time utilization (based on original equipment cost) was 68.4% compared to 72.0%. The Company’s rental fleet, based on original equipment cost, ended 2023 at approximately $2.8 billion, representing an 18.3% increase. Average rental rates improved 3.8% from the year-ago quarter and 0.8% on a sequential quarterly basis. Dollar utilization was 40.3% compared to 41.9%. Average rental fleet age on December 31, 2023, was 39.7 months compared to an industry average age of 49.0 months. Paid regular quarterly cash dividend of $0.275 per share of common stock. Reviewing the Company’s fourth quarter and full year performance, Brad Barber, chief executive officer of H&E, referred to several important developments. Mr. Barber pointed out, “Strong execution of strategic initiatives and resilient non-residential activity resulted in healthy financial metrics throughout the year. Total revenues in the fourth quarter improved 9.3% compared to the year-ago quarter, while rental revenues grew 14.5% over the same period, resulting in a rental margin of approximately 54.2%. For the full year, total revenues set a Company record of just under $1.5 billion, representing an 18.1% increase compared to total revenues in the previous year. Over the same period, rental revenues grew 24.1%, exceeding $1.0 billion for the first time, and completed the year with an average margin of 52.1%. Indicative of the durable industry fundamentals, rental rates in the fourth quarter improved 3.8% compared to the same quarter in 2022, and 0.8% on a sequential quarterly basis. For the full year, rental rates were 5.6% better than 2022. Our strategic accomplishments in 2023 included a record gross fleet investment totaling $737 million, exceeding our revised target range for the year. We completed the year with a fleet original equipment cost (OEC) of approximately $2.8 billion, or 18.3% greater than our fleet OEC at the conclusion of 2022. Our average fleet age of 39.7 months remained among the youngest in the industry.” Mr. Barber went on to state, “The pace of branch expansion remained impressive throughout 2023, further strengthening the Company’s competitive position. The success of our accelerated branch expansion program led to a record 14 branch additions in 2023, including three new locations in the fourth quarter. These branch additions established greater density in the Gulf Coast, Mid-Atlantic, Southeast and Midwest regions, providing the Company with increased exposure to new projects. Also, additional growth and improved positioning was accomplished through the acquisition of attractive and well-managed businesses with operations in core metropolitan statistical areas of the U.S. One transaction, which closed in the fourth quarter, added three locations in California, increasing the number of branch additions to 17 in 2023, or a 14% increase across our branch network when compared to the branch count at the conclusion of 2022.” Addressing 2024 strategic growth initiatives, Mr. Barber said, “We plan to slow our 2024 gross fleet expenditures to a range of $450 million to $500 million. We believe our record fleet expenditures in 2023 and young fleet age advantageously position the Company to address the ongoing growth in construction markets and these factors should support steady improvement in physical utilization. Regarding our branch network, new branch growth will remain a fundamental component of our strategic plans in 2024 with 12 to 15 new locations expected in our branch expansion program. In addition, branch growth could be enhanced through attractive acquisition opportunities that offer access to vibrant construction markets in the U.S., as demonstrated by our latest acquisition which closed in early 2024, adding one location each in Phoenix and Denver.” Mr. Barber noted the outlook for the equipment rental industry remains encouraging, supporting the point by saying, “Commentary from our customers regarding pending construction opportunities in 2024 remains optimistic and supports a business climate characterized by stable to modestly higher non-residential and industrial activity. Construction starts are projected to grow on a year-over-year basis with the growth reinforced by mega projects and increased spending on infrastructure programs. Also, we remain confident that expanding rental penetration will be a meaningful catalyst for increased industry growth.” FINANCIAL DISCUSSION FOR FOURTH QUARTER 2023 Revenue Total revenues increased 9.3% to $385.8 million in the fourth quarter of 2023 from $353.1 million in the
Borgman Capital sells Aerial Work Platforms, Inc. to Herc Rentals Inc.
Borgman Capital, a lower middle market private equity firm, announced the sale of its portfolio company Aerial Work Platforms, Inc. (“AWP”), an equipment rental company, to Herc Rentals Inc. Terms of the transaction were not disclosed. Founded in 1979, AWP specializes in the rental, service, and sale of aerial lift equipment including scissor lifts, boom lifts, telehandlers, and forklifts. Borgman Capital acquired AWP in December 2020 from the company’s founder, Pat Barney. AWP has locations in Sussex, Janesville, Neenah, and Kenosha, Wisconsin, and is the number one independent rental equipment company in the state based on fleet size. During the three-year investment period, AWP’s growth was driven by strategic equipment purchases, fleet diversification, operational improvements, geographic expansion to Kenosha, and increasing market share. Following Mr. Barney’s planned retirement, Borgman Capital hired rental equipment industry veteran Robert Rivera as president. “We executed many new growth initiatives during the investment period. At the end of the day, AWP’s success comes down to Robert’s leadership and the strong customer service culture he built,” said Sequoya Borgman, founder and CEO of Borgman Capital. “AWP is an example of what’s possible when the right leader is put in place to build on a founder’s legacy after an ownership transition. It was a pleasure to partner with Robert and the team over the last three years and we will be cheering everyone on in their next phase of growth.” Rivera said: “The outstanding success we achieved is a direct result of the incredible talent at AWP. The team’s dedication to customer service will remain our focus as part of Herc Rentals. I am appreciative of Borgman Capital’s support and the latitude I was given to lead, set ambitious goals, and make the pivotal decisions needed to grow the business.” Founded in 1965, Herc Rentals is one of the leading equipment rental suppliers in North America with 2023 total revenues of approximately $3.3 billion. Herc Rentals’ parent company, known as Herc Holdings Inc., was listed on the New York Stock Exchange on July 1, 2016, under the symbol “HRI.” Herc Rentals serves customers through approximately 400 locations and has about 7,200 employees in North America. Reinhart Boerner van Deuren served as Borgman Capital’s legal counsel on the transaction.