H&E Equipment Services, Herc Rentals, Ryder System and United Rentals posted equipment rental fleet utilization rate declines in the third quarter as rates fell from pandemic-induced highs.
H&E Equipment Services’ rental equipment dollar utilization rate fell to 41.5%, down 1.2 percentage points year over year, according to the company’s 10-Q filing with the Securities and Exchange Commission. The company’s rental equipment time utilization also dropped to 70% in Q3, down 3.3 percentage points YoY.
The rates declined in Q3, dropping from abnormal highs during the third quarter of 2022, H&E Equipment Services’ Chief Executive Brad Barber said during the company’s Oct. 26 earnings call.
“The contribution from higher rental rates was offset by lower utilization and a modest burden from our 2023 growth initiatives,” he said.
H&E’s total equipment rental revenue clocked in at $315.8 million, up 24.5% YoY, due to fleet growth and rental rate appreciation, according to the filing.
Herc Rentals’ dollar utilization rate drops
Herc Rentals’ dollar utilization rate in Q3 dropped to 40.3%, down 3.2 percentage points YoY, according to the company’s earnings release. The decline was attributed to labor disputes and supply chain issues, but the company is confident about the state of the rental market, Senior Vice President and Chief Financial Officer Mark Humphrey said during the company’s Oct. 24 earnings call.
“We worked through the quarter to right-size the fleet and feel good about where we are heading into the fourth quarter,” he said. “We saw sequential improvement and dollar utilization every month this quarter following the seasonal demand trend.”
The company’s rental revenue increased to a record $765 million in Q3, up 8% YoY on 6.9% higher pricing and 11.5% higher volume, according to the earnings release.
Ryder rental revenue slips
Ryder System’s commercial rental revenue for Q3 clocked in at $293 million, down 16% YoY, according to its Oct. 25 10-Q filing. Ryder’s total Fleet Management Solutions revenue fell to $1.5 billion, down 6% YoY.
Fleet Management Solutions declined “due to lower rental demand and as a result of the exiting of the U.K., partially offset by higher contractual revenue from ChoiceLease and SelectCare,” John Diez, executive vice president and chief financial officer at Ryder System, said during the company’s Oct. 25 earnings call.
Ryder System’s rental utilization was 75% on its power fleet, down 8 percentage points compared with Q3 2022’s record utilization rate, according to the company’s earnings presentation. Lower utilization was partially offset by a 1% price increase.
United Rentals grows rental revenue
United Rentals’ equipment rental revenue for Q3 was $3.2 billion, up 18% YoY, according to the company’s Oct. 25 10-Q filing. United Rentals’ fleet productivity, a measure of the impact of changes in rental rates, time utilization and mix on owned equipment rental revenue, was again negative, declining 2.2% YoY in Q3.
“An increase in our average fleet size contributed 22.2% to that growth, partially offset by a 2.2% decline in as reported fleet productivity and assumed fleet inflation of 1.5%,” Chief Executive Matthew Flannery said during the company’s Oct. 25 earnings call.
Current market conditions “mean greater rental penetration and a higher interest environment just adds another layer of that higher penetration,” he said.
