Megaprojects boost performance at large equipment rental houses

H&E Equipment Services, Herc Rentals and United Rentals saw equipment rental revenue growth in the third quarter as megaprojects supported several rental companies.  

H&E Equipment Services’ rental revenue clocked in at $326.2 million, up 3.3% year over year, according to the company’s Oct. 29 earnings presentation. Megaprojects, or large-scale construction and infrastructure projects, continue to result in higher equipment volumes and longer project durations, which leads to premium utilization performance and strong deployed equipment yields, Chief Executive Brad Barber said during the company’s earnings call that day.  

“Due to their remarkable equipment needs, multiple large equipment rental providers are active on most projects,” he said. “With visibility beyond 2025, megaprojects remain a stable base of demand for construction rental equipment.” 

Meanwhile, H&E’s rental equipment dollar utilization rate fell to 39.4% from 41.5% in Q3 2023, according to the earnings presentation. In addition, the company’s rental equipment physical time utilization fell to 67.6% in Q3 from 70% in Q3 2023, as non-megaproject activity slowed amid higher interest rates, Barber said. 

“Local project activity remains muted due in part to an extended period of elevated interest rates, and we continue to manage a slight oversupply of certain types of equipment,” he said. “We believe a trend of moderating activity will persist through the remainder of the year with physical fleet utilization and rental rates expected to remain below year-ago measures.” 

Herc Rentals keeps breaking rental revenue records 

Herc Rentals’ rental revenue increased to a record $866 million in Q3, up 13.2% YoY on 2.3% higher pricing and 10.7% higher volume, according to the company’s Oct. 22 10-Q filing with the Securities and Exchange Commission.  

Herc Rentals expects megaprojects and hurricane recovery efforts to boost revenues for the remainder of the year, President and Chief Executive Officer Larry Silber said during the Oct. 22 earnings call. 

“We expect, once again, to generate record rental revenue in the fourth quarter as megaprojects accelerate, new acquisitions provide incremental contributions, and revenue related to our support of the recovery efforts for the two recent hurricanes, are captured,” he said. “When it comes to margin, we’re going to continue to carefully manage the cost structure and fleet utilization to address this near-term disparity of demand we’re seeing between certain regions, customer and project types.” 

The company’s dollar utilization in Q3 landed at 42.2%, up 10 basis points YoY, according to Herc’s earnings presentation. 

United Rentals fleet productivity improves

United Rentals’ equipment rental revenue for Q3 was $3.5 billion, up 7.4% YoY, according to the company’s Oct. 24 earnings release.  

United Rentals is growing in several markets and expects that to continue into 2025, Chief Executive Matthew Flannery said during the Oct. 24 earnings call. 

“We saw growth in both construction led by non-[residential] and our industrial end markets, with particular strength in manufacturing,” he said. “We have good momentum heading into 2025, which is setting up to be another year of growth based on what we see and sense today. The tailwinds for a multitude of large, complex projects are still in the early innings, and we believe we’re uniquely positioned as the partner of choice with our customers.”  

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 3.5% in Q3 according to the company’s earnings presentation.