H&E Equipment Services posted $275.7 million in equipment rental revenue for the fourth quarter of 2022, compared to $203.7 million for the fourth quarter of 2021, a 35.3-percent year-over-year increase. Total revenue for the fourth quarter of 2022 was $353.1 million, compared to $281.3 million for the fourth quarter of 2021, a 25.5-percent increase. Used equipment sales increased 2.5 percent from $29.5 million to $30.2 million, while new equipment sales declined 4.4 percent from $22.5 million to $21.5 million apply to. Net income was $51.2 millioncompared to$21.7 millionin the fourth quarter of 2021.
Average time utilization (based on original equipment cost) was 72.0 percent compared to 73.1 percent in the fourth quarter of 2021. The company’s rental fleet based on original acquisition cost ended 2022 at approximately$2.4 billion, representing a 26.8-percent increase from 2021. Average rental rates, excluding One Source, improved 10.6 percent compared to the fourth quarter of 2021 and 1.8 percent compared to the third quarter of 2022.
Dollar utilization improved to 41.9 percent compared to 39.3 percent in the fourth quarter of 2021. Average rental fleet age onDecember 31, 2022, was 43.6 months compared to an industry average age of 53.3 months.
H&E closed the sale of the Komatsu earthmoving distribution business for proceeds of$29.2 million. A gain of$15.4 millionwas recognized on the sale.
“Our results showed solid fleet utilization, continued gains in equipment pricing, further fleet growth, and branch expansion,” said Brad Barber, H&E Equipment Services CEO. “In addition, figures for the quarter included the operations fromOne Source Equipment Rentals Inc.following the closing of our acquisition onOctober 1, 2022. Physical fleet utilization remained at a healthy level, averaging 72.0 percent despite pressure from typical seasonal factors that contributed to a decline in the measure of 110 basis points when compared to the fourth quarter of 2021 and 130 basis points on a sequential quarterly basis. Rental rates, which exclude One Source, improved 10.6 percent compared to the same quarter a year ago and 1.8 percent on a sequential quarterly basis. Both measures remained among the best in our industry. Our fleet original equipment cost (OEC) closed the quarter at a record of approximately$2.4 billion, with gross capital expenditures in the quarter of$128.3 millionand a record gross investment of$507.8 millionfor all of 2022. Finally, we opened two new branch locations in the quarter, closing the year with a total of 10 branch openings for the second consecutive year. We began 2023 with a network of 120 branches across 29 states."
Continued optimism for 2023
Barber expressed strong optimism regarding 2023. “Favorable trends have emerged in the equipment rental industry and represent a promising outlook. We expect the robust business environment to persist through the year as strong project backlogs and accelerating federally funded programs escalate spending, particularly in the non-residential and industrial end markets. We believe these positive trends are sustainable, due in part to a rise in federal programs addressing improvements in infrastructure that require extended periods to complete. In addition, we expect further growth in rental penetration to drive new demand for equipment as the combination of unfavorable fiscal conditions, including rising interest rates, and lingering delays in equipment deliverability encourage a shift by certain customers away from the ownership of equipment. These multiple catalysts for increased rental demand should maintain healthy equipment utilization and contribute to an attractive pricing environment characterized by modest sequential quarterly rate improvement.
"Numerous achievements in 2022, which included the completion of our transition to a pure-play rental business and 18-percent growth in our branch location count, have served to fortify a sound base for future operations and strategic growth. These achievements contributed to our impressive financial performance, including record revenues and margins, while adding greater scale after our expansion into new geographies and increased branch density in existing regions. We remain focused on further growth initiatives in 2023 and believe this fundamentally sound industry will continue to create opportunities. Growth initiatives for the year include further expansion of our branch network, with a revised range of 10 to 15 new locations, up from 10 new branches in each of the last two years. Also, we are targeting a gross fleet investment of$500 millionto$550 millionas we continue to support existing stores and the new branch locations with both a young fleet and a diversified mix of equipment lines. Finally, attractive acquisition opportunities continue to appear in our industry and an evaluation of suitable targets remains part of our comprehensive growth strategy in 2023."
For the full year, H&E posted $956 million in equipment rental revenue compared to $729.7 million in 2021, a 31-percent year-over-year growth surge. New equipment sales were flat, while used equipment sales dropped from $135.2 million in 2021 to $90.9 million in 2022 as many rental companies held on to their older units because of long lead times from manufacturers. Total revenue for 2022 for H&E was $1,244.5 million, compared to $1,062.8 million in 2021, a 17.1-percent hike.
Based in Baton Rouge, La., H&E Equipment Services is No. 7 on the RER 100.
