H&E Equipment Services, Inc.

Total revenues were $384.9 million in Q3 2024, down $15.8 million or 4% year over year. Rental revenues rose 2.8% to $288.1 million, while sales of rental equipment fell to $27.8 million from $52.7 million; total equipment rental revenues improved 3.3% and were up 9.2% on a trailing-12-month basis. Gross profit declined 9% to $171.5 million, gross margin was 44.5% versus 47% a year ago, adjusted EBITDA was $175.3 million versus $191.4 million, and diluted EPS was $0.85 versus $1.35. For the business drivers, physical utilization was 67.6%, down 240 basis points year over year, rental margins were 51.2% versus 53.3%, and rental rates were down 0.1% year over year. For the full year, gross fleet investment through September 30 was $327.8 million, and management kept its 2024 gross fleet expenditure target at $350 million to $400 million. Looking ahead, management said Q4 should remain muted with utilization and rates below year-ago levels, while 2025 could improve as interest rates ease and megaprojects continue to support demand.

Brad Barber framed the quarter as a soft-demand period where lower construction spending, weaker utilization, and a slight equipment oversupply pressured results, but he emphasized that H&E is still executing its long-term branch-expansion strategy. He said the company added 16 locations in 2024, is comfortable opening 12 to 18 locations in 2025 if conditions remain similar, and sees that as a decades-long investment in stronger geographic coverage and megaproject participation. His tone was cautious on the near term but constructive on 2025, especially if lower interest rates help local project activity recover.

Leslie Magee detailed the quarter’s financial pressure points: revenue of $384.9 million, gross profit of $171.5 million, gross margin of 44.5%, net income of $31.1 million, and adjusted EBITDA of $175.3 million. She pointed to SG&A of $112.4 million, up 7.9% year over year, largely because branch expansion added about $11 million in expenses, and noted free cash flow used of $56 million for the first nine months, versus $175.5 million used a year ago; excluding acquisitions, adjusted free cash flow was $101.8 million. She also highlighted a solid balance sheet with net leverage of 2.2x, liquidity of $472.4 million, about $1.6 billion of excess availability under the ABL, no debt maturities before December 2028, and a quarterly dividend of $0.275 per share that management intends to continue paying subject to board approval.

Analysts focused on whether rental rates could stabilize, especially excluding the impact of megaproject mix, and Barber said the declines are tied to shifting more fleet to megaprojects rather than to pricing weakness in small and medium customer markets. He said he sees no aggressive competitive behavior, expects only small sequential rate pressure in the near term, and thinks a clearer inflection could come in the back half of 2025 if rate cuts improve local project economics. Questions also centered on branch expansion pace, megaproject competitiveness, and used equipment sales; management said it remains selective on projects, expects 12 to 18 new locations in 2025 if conditions hold, and is seeing some softening in auction values but still believes 50%+ gross margins on used equipment sales are achievable over time.