Rate increases help corporate rental houses overcome inflation

H&E Equipment Services, Herc Rentals and United Rentals posted equipment rental revenue growth in the first quarter as rate increases overcame inflationary pressures.  

H&E Equipment Services’ rental revenue clocked in at $261.7 million, up 12.8% year over year, due to fleet growth and rental rate appreciation, according to the company’s April 30 earnings presentation. Rental rates further appreciated in Q1, continuing a trend that began in 2022, H&E Equipment Services’ Chief Executive Brad Barber said during the company’s April 30 earnings call.  

“Rental rates in the quarter improved 2.9% on a year-over-year basis, adding to the consistent rate appreciation seen since 2022,” he said. “Although a slowing rate of change is expected in 2024, we continue to benefit from the gains achieved in rental rates over the past 24 months and have now produced better than a 17% increase in rates through the first quarter of 2024.” 

Meanwhile, H&E’s rental equipment dollar utilization rate fell to 37% from 38.6% in Q1 2023, according to the earnings presentation. The company’s rental equipment time utilization also dropped to 63.6% in Q1, down compared with 67.3% in Q1 2023. 

Herc Rentals’ dollar utilization rate remains flat 

Herc Rentals’ dollar utilization rate in Q1 landed at 39.7%, flat YoY, according to the company’s April 23 10-Q filing with the Securities and Exchange Commission. Dollar utilization trends should return to normal during 2024, Senior Vice President and Chief Financial Officer Mark Humphrey said during the earnings call. 

“Our anticipation is dollar utilization cadence should follow that of any other sort of annual view you want to take,” he said. “You’ll see a run, it’ll increase into Q2, it will top in Q3, and then slightly come off of that for Q4, just based on seasonality.” 

The company’s rental revenue increased to a record $719 million in Q1, up 9.9% YoY on 5.1% higher pricing and 8% higher volume, according to the 10-Q filing. 

United Rentals grows rental revenue 

United Rentals’ equipment rental revenue for Q1 was $2.9 billion, up 6.9% YoY, according to the company’s April 24 10-Q filing with the SEC. The current rental rate environment helped boost United Rentals over inflationary pressures, Chief Executive Matthew Flannery said during the company’s April 25 earnings call. 

“We still believe that it’s a constructive rate environment and we’re pleased to see that played out that way,” he said. “Rate will help overcome any inflationary issues that we have, and then specifically in this quarter, we had a little improvement from the Yak acquisition and we’ll see that as we go forward.” 

United Rentals’ fleet productivity, a measure of the impact of changes in rental rates, time utilization and mix on owned equipment rental revenue, increased by 4% in Q1. 

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