H&E Equipment Services reported Q4/17 revenues increased 20.6% to $294.7 million versus $244.3 million a year ago.

Net income was $85.9 million in the fourth quarter compared to net income of $12.4 million a year ago. H&E recorded an income tax benefit of $58.4 million versus income tax expense of $4.4 million a year ago, resulting from a one-time revaluation of its deferred tax assets and liabilities resulting from the decrease in the corporate federal income tax rate enacted in December. The effective income tax rate was (211.7%) in Q4/17 and 26.3% in Q4/16.

Adjusted EBITDA increased 15.0% to $90.7 million in the fourth quarter compared to $78.9 million a year ago, yielding a margin of 30.8% of revenues compared to 32.3% a year ago.

Rental revenues increased 10.9% to $127.7 million in the fourth quarter compared to $115.2 million a year ago.

New equipment sales increased 65.9% to $74.4 million in the fourth quarter compared to $44.9 million a year ago.

Used equipment sales increased 28.8% to $32.1 million in the fourth quarter compared to $24.9 million a year ago.

Gross margin was 34.2% compared to 34.6% a year ago.

Rental gross margins were 51.0% in the fourth quarter of 2017 compared to 47.7% a year ago.

Average time utilization (based on original equipment cost) was 74.2% compared to 70.3% a year ago. Average time utilization (based on units available for rent) was 71.3% compared to 67.6% last year.

Average rental rates increased 1.0% compared to a year ago and 0.6% sequentially.

Dollar utilization was 36.2% in the fourth quarter compared to 34.3% a year ago.

Average rental fleet age at December 31, 2017 was 34.6 months compared to an industry average age of 44.4 months.

John Engquist, H&E Equipment Services’ CEO, said, “Solid performance by both our rental and distribution businesses drove a 20.6% increase in revenues for the fourth quarter compared to the year ago period. The non-residential construction markets were exceptionally strong, resulting in extremely high demand for rental equipment. Physical utilization increased nearly 400 basis points to 74.2% for the quarter and we achieved a 1.0% increase in rates from the prior year. Rental revenue increased 10.9% and margins increased 330 basis points to 51.0% compared to the year ago quarter. Increased demand for new cranes and earthmoving equipment drove a 65.9% improvement in new equipment sales. We are extremely pleased with our results and the current trends in our end-user markets.

“We expect 2018 to be a very opportunistic year for our business and industry given the current strength in the non-residential construction markets. Oil prices are above a year ago, resulting in a rebound in exploration activity and energy-related projects. The new tax reform plan could also drive increased investment in construction. Should the administration and Congress pass an infrastructure bill, we believe the industry could see an expanded cycle. We also believe our operating environment is positive and we are focused on expanding our business in terms of both fleet size and geographic footprint. Our recent acquisition of CEC is representative of the types of acquisitions we intend to pursue – acquisitions which are very complementary to our business and increase our density in active markets or allow us to enter new markets. We also plan to continue our Greenfield or warm start expansion strategy.”