Kevin Inda – Vice President of Investor Relations John Engquist – Chief Executive Officer Leslie Magee – Chief Financial Officer and Secretary.

Steven Fisher – UBS Neil Frohnapple – Longbow Research Bradley Barber – President & Chief Operating Officer Nick Coppola – Thompson Research Group Sean Egan – KeyBanc Capital Markets Kenneth Williamson – JPMorgan Seth Weber – RBC Capital Markets.

Good mornings, and welcome to the H&E Equipment Services Second Quarter 2016 Earnings Call. Today’s call is being recorded. And at this time, I would like to turn the call over to Mr. Kevin Inda, Vice President of Investor Relations. Please go ahead, sir..

Thank you, Lisa and welcome to H&E Equipment Services' conference call to review the company’s results for the second quarter ended June 30th, 2016, which were released earlier this morning. The format for today’s call includes a slide presentation, which is posted on our website at www.he-equipment.com. Please proceed to slide 1.

Conducting the call today will be John Engquist, Chief Executive Officer; Brad Barber, President and Chief Operating Officer; and Leslie Magee, Chief Financial Officer and Secretary. Please proceed to slide 2.

During today’s call, we will refer to certain non-GAAP financial measures and we have reconciled these measures to GAAP figures in our earnings release, which is available on our website. Before we start, let me offer the cautionary note that this call contains forward-looking statements within the meaning of the federal securities laws.

Statements about our beliefs and expectations and statements containing words, such as may, could, believe, expect, anticipate and similar expressions constitute forward-looking statements.

Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. These risks include those described in the risk factors and the company’s most recent Annual Report on Form 10-K.

Investors, potential investors and other listeners are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

The company does not undertake to publicly update or revise any forward-looking statements after the date of this conference call. With that stated, I’ll now turn the call over to John Engquist..

Thank you Kevin and good morning everyone. Welcome to H&E Equipment Services second quarter 2016 earnings call. On the call with me today are Leslie Magee our Chief Financial Officer, and Brad Barber our President and Chief Operating Officer, and Kevin Inda our Vice President of Investor Relations.

I'll direct my comments this morning to our second quarter highlights, our business and overall market conditions. Then Leslie will review our financial results. When Leslie finishes, I will close with a few brief comments, after that we’ll be happy to take your questions. Proceed to slide 5 please.

The non-residential construction market remained healthy and demand for rental equipment continued to be solid during the second quarter. Unfortunately weather was again a major headwind for our business with the heavy rain fall and subsequent flooding in South Texas and Louisiana.

Despite this headwind, we maintained strong utilization at 70.1% based on how we see, down just 20 basis points from a year ago. Strong demand for AWPs helps to offset a significant decline in earthmoving utilization. Our distribution business specifically cranes continued to be soft as a result of the ongoing weakness in oil patch.

New crane sales declined 52% to $19 million from a year ago. On a combined basis our distribution segments were down $19.7 million. Beginning with the top line, total revenue decreased 7.7% or $20.3 million to $242.1 million. Net income was $7.5 million or $0.21 per diluted share and EBITDA was $72.5 million down 8.7% from a year ago.

In terms of rental business, revenues were $108.7 million and essentially flat with a year ago. Gross margins remain strong at 46.9%. Our overall rental rates declined 0.3% from a year ago as a competitive environment especially on the big project continues to be extremely aggressive.

We continue to believe rates will be flat to down slightly for the reminder of the year. From a regional perspective, we're experiencing rate pressure in our Gulf Coast market due to aggressive pricing on large projects that are underway and the weaker dollar utilization remain solid at 33.9% versus 34.2% a year ago. Proceed to slide 6 please.

This slide illustrates our nationwide footprint, various regions, branch locations in Greenfield sites that we have opened during the last three and that’s far in the 2016. We currently have 76 total branches and have opened 13 Greenfield sites since the beginning of 2013. We expect to open two or three more location this year.

All of our recent Greenfield branches have focused on growing our rental business. In addition all of the new branches we open are contiguous to or within our current regions. Overall the performance of our Greenfield branches has been very positive as we conduct the tremendous amount of market research before pulling the trigger.

While we will continue to consider acquisition opportunities, we believe our Greenfield growth strategy is currently the right strategy at the right time for our business. Slide 7 please. The oil and gas markets remained weak and accounted for roughly 4% of our total revenue in the second quarter.

While oil prices are significantly higher than earlier this year and the rig count has increased somewhat, we believe the oil industry is not convinced the current oil prices will hold the firm. However, if we see oil get to $60 and remain there, we would expect to see a material improvement in our energy exposure markets.

Our biggest exposure to the oil and gas markets is in the Permian and Eagle Ford basins which are lower lifted cost spills. We are seeing some drilling again in the Permian, but nowhere near the levels at the peak.

However even with weakness in oil patch, utilization in our combined oil field markets was 69.3% during the second quarter, time utilization in our four Texas branches with heaviest oil and gas exposure averaged around 68.5% utilization on a combined basis during the second quarter.

91% of our revenue in Texas are largest oil exposed market is coming from non-energy related activity. The weakness in oil and gas markets has not only had a material impact on our crane business, but the crane market in general.

In fact the crane market may be as soft as we have ever seen and we don't expect a solid market for cranes to return until the energy market rebounds. The weakness is also having a spillover effect on our parts and service business as there is little rebuild opportunity on cranes right now.

When the oil and gas markets eventually rebound, we expect there will be a significant amount of pent-up demand for cranes. Proceed to slide 8 please. Let me conclude with a few key points on our current market conditions which we believe remain favorable for our overall industry and particular end-user markets we serve.

In terms of the industry in general, two of the leading indicator for the non-residential construction markets posted solid gains toward the end of the quarter. The May ABI increased to 53.1 from 50.6 in April, which was the highest level in nearly a year.

The June ABI was also strong at 52.6 and marked the fifth consecutive month-to-month above the expansion level of 50. The Dodge Momentum Index in June hit the highest level since January '09 and reflected the largest sequential improvement since May of '06.

Recent Dodge Data also indicates the cycle continues to expand with strong construction start and puts in place. The FAST Act which was passed on December 4 will also be a positive for the industry with $305 billion in funding fix much needed infrastructure nationwide. Approximately $230 billion has been appropriate for highway alone.

At this time, I'm going to turn the call over to Leslie for the financial review..

Good morning and thank you John. I’ll begin on slide 10 to discuss our financials in greater detail. As John discussed that the weather and ongoing weakness in our distribution business were significant challenges for our business during the second quarter.

To summarize, total revenue decreased to 7.7% or $20.3 million over the same period a year ago to $242.1 million, $14.5 million of this decrease was related to lower new equipment sales. Gross profit decreased 5.4% to $4.7 million to $81.7 million compared to a year ago.

As for the rental segment, rental revenues were essentially flat over the same period a year ago at $108.7 million for the quarter. Despite the weather challenges, physical utilization remains healthy with average time utilization based on how we see of 70.1% for the quarter compared to 70.3% a year ago.

As John mentioned solid demand for AWPs offset the weakness in earthmoving equipment due to weather and ongoing softness in crane demand. AWPs physical utilization increased 230 basis points, while earthmoving and crane physical utilization decline 530 basis points and 270 basis points respectively.

Again, we are encouraged that aerial work platform equipment which represents 60% of our rental fleet is showing solid demand; we believe the issues impacting earthmoving demand are temporarily in nature.

Taking a deeper dive into physical utilization by end-market, our utilization in line [PF], oilfield markets was 70.4% this quarter, down slightly from 70.8% a year ago. And as our oilfield markets combined physical utilization was 69.3% compared to 68.9% a year ago.

Rental pricing declined 30 basis points from a year ago rates and our dollar returns was 33.9% compared to 34.2% a year ago. As we expected new equipment sales do not near the increase we deliver in the first quarter declining to 22.5% or $14.5 million to $49.9 million.

Crane sales decreased 52% or $19 million and year-over-year increases in new AWP and earthmoving sales partially offset a significant decline in new crane sales. Used equipment sales also decreased, down 17.8% versus $5.2 to $23.8 million.

Sales from our rental fleet comprised 85.4% of total used equipment sale this quarter compared to 82.1% in the second quarter a year ago. Our parts and service segment delivered $43.6 million in revenue on a combined basis, down 1.2% from a year ago.

Total gross profit for the quarter was $81.7 million compared to $86.4 million a year ago, a decrease of 5.4% and a 7.7% decrease in revenue. Consolidated margin was 33.8% compared to 32.9% a year ago. To expand on gross margin by segment, rental gross margins for the quarter was 46.9% compared to 46.7% last year.

For the second quarter margins on new equipment sales was 10.7% compared to 11.8% a year ago. Used equipment sales gross margin was 29% compared to 32.2% last year. Margins on pure rental fleet only sales was 32.4% compared to 37.2% a year ago. Parts and service gross margin was 42.2% compared to 41.6% a year ago on a combined basis. Slide 11 please.

Income from operations for the second quarter decreased 23% to $25.4 million compared to $33 million last year on a margin of 10.5% compared to 12.6% in the second quarter last year. Income from operations declined as a result of lower revenues and higher SG&A compared to year ago. Proceed to slide 12.

Net income was $7.5 million or $0.21 per diluted share in the second quarter compared to $11.5 million or $0.33 per diluted share in the same period a year ago. Effective tax rate was 41% compared to 40.9% a year ago. Please move to slide 13.

EBITDA was $72.5 million in second quarter compared to $79.4 million a year ago and EBITDA margin was 29.9% compared to 30.3% a year ago. Next on slide 14. SG&A was $57 million, a $2.6 million or 4.8% increase over the same period last year. SG&A as a percentage of revenue was 23.6% this quarter compared to 20.7% a year ago.

Branch expansions contributed $1.9 million or nearly 75% of the increase in SG&A during the quarter. Next on slide 15. Our gross fleet capital expenditures during the second quarter were $69 million, including non-cash transfers from inventory. Net rental fleet capital expenditures for the quarter were 48.7 million.

At the end of the second quarter, the size of our rental fleet based on how we see was $1.3 million, less than 1% or $8.8 million increase since the end of 2015. Gross PP&E CapEx for the quarter was 6.3 million and net was 5.4 million, our average fleet age as of June 30 was 31.6 months.

We generated free cash of $12 million in the second quarter compared to $21.9 million a year ago and the single largest driver of the difference was higher fleet spending compared to last year’s second quarter based on timing and demand.

We’ve included a free cash flow GAAP reconciliation to net cash provided by operating activities in the appendix at the end of the presentation, reconciling free cash flow for the same periods presented here on the slide. Proceed to slide 17 please.

At the end of the second quarter our outstanding balance under our 602.5 million ABL facility was 174.5 million and therefore, we had 420.3 million of availability at quarter end, net of 7.7 million of outstanding letters of credit. So now I’ll turn the call back to John for conclusion and anyone has call for question..

Thank you, Leslie. Please proceed to slide 19. Let me quickly conclude so we can take questions. Weather and ongoing weakness in our distribution business were both major challenges for our business during the second quarter. However, let’s focus on the positive.

Despite the obstacles during the quarter, our utilization based on how we see was solid at 70.1%. I would also point out the trends during the progression of the quarter which were very positive. Average utilization based on how we see for the month of April was 69.2%. Utilization climbed to an average of 71.4% for the month of June.

Based on today’s data we are currently running north to 72% on average. We should also look at earthmoving utilization trends given the heavy weather impacts during the quarter. Earthmoving utilization was 61.9% on average for the month of April, gradually increasing to 64.5% for June and is currently averaging around 68%.

I would also point out our rental rates have only declined 0.2% on a year-over-year basis. We believe these metrics measure up very well when compare to what we’ve seen recorded this far in the industry. Lastly, we paid our either consecutive quarterly cash dividend on June 9, as usual the dividend is subject to board review and approval each quarter.

At this time, we’d like to take your questions.

Operator, please provide instructions?.

Thank you, sir. [Operator Instructions] Our first question comes from Steven Fisher with UBS..

Thanks. Good morning..

Good morning, Steven..

Just a quick clarification, first, just to make sure the weather impact you had was in a month of April?.

Well, it was spread all over the second quarter. May was a really tough rain month also..

Okay. Just in terms of how you're thinking about rental revenue year-over-year in the second half of the year, I mean you're right on the cost split [Ph] of an inflection was kind of a flat revenues in Q2.

Are you thinking about pushing CapEx to support revenues or through just manage for return? How should we think about the year-over-year in the second half of the year?.

We are not going to push CapEx to drive revenue. We are going to spend money where it makes sense and I think which you’ll see us do to spend some money on aerial equipment. Our aerial utilization is currently running around 75%, so the demand is exceptionally strong and we are spending some money there.

We are actually shrinking our crane fleet right now. We spent a little money in some select markets on earthmoving equipment, but primarily what we are spending there is maintenance capital. So we are going spend money where it makes sense, but we wouldn’t be spending money just to drive revenue..

Okay.

So it sounds like we should expect some year-over-year moderate declines in rental revenues in the second half?.

Well, no. I am not saying that. I am saying that we are probably going to spend some growth capital on aerial and we’ll be spending money where it makes sense, but I'm not saying we are going to decline in revenues..

Okay. Just maybe lastly, can you just give us some of your key assumptions underlying the flat is currently lower rate for the year and going forward in terms of fleet growth utilization mix some of that.

What do you think it will take to be able to get to that side is slightly lower?.

Well look, we are still comfortable that the aerial of the country we are seeing the biggest rate pressures in the Gulf Coast and it’s relating to the fact that there is lot of big projects going on and the competitive pressures on those big projects is strong. I mean, it’s really aggressive pricing.

Four of our seven regions have seen year-over-year rate improvement. So, you know, rate pressure is not real broad based for us, we’ve got some markets we are seeing – solid rate gains and then we’ve got some markets like the Gulf Coast, there is a lot of rate pressure.

But we are comfortable that we can maintain flat to slightly down the rates for the remainder of the year..

Okay. Thanks a lot..

Our next question comes from Neil Frohnapple with Longbow Research..

Hi. Good morning..

Good morning..

Just a quick follow-up rental rate commentary John, I mean what’s your sense of – what’s causing the competitive pressure? I mean is it stunning from still excess equipment in the market or just anything else you can point to? And if it is excess equipment, when you would expect that begin to normalize?.

I think it’s different by category. I mean the crane demand is just so weak. I mean you got rate pressures there. I think there is probably some excess capacity and heavy earthmoving and equipment right now that’s putting some rate pressure.

On aerial side, it’s a pretty positive picture from utilization standpoint, but these big long-term projects is just United has gone after those projects hard, Sunbelt is going after them hard and it’s a very competitive rate environment on those big long-term projects..

Okay, great.

Can you just remind us really quickly what percentage of your rental feet or rental revenue is tied to crane? I think you called that aerial earlier being the largest portion, but what is crane makeup today?.

Crane is about 10% or 11% of our fleet..

Okay. Got it. Thanks Leslie. And then switching gears, can you just talk about what you are seeing regarding the used equipment prices? And if you would expect any notable movements over the coming quarter is based on anything you’re seeing in the market, such as inventory levels and I guess it’s a follow-up.

Should we read anything on the used equipment margins taking down a little bit in the quarter?.

I think, Brad may add more color to this. I think there is a residual pressure on crane right now just because of pure lack of demand. So crane pricing is under some pressure. Aerial pricing is holding up well.

We not seeing a lot of degradation there and there is probably some rate pressure on heavy earthmoving equipment, just based on capacity issues..

I think additionally I’d mentioned that there was a mix issue within the quarter, some of our distribution base sales are our RPO sales that pulled on our margin a little bit, not so much. Our typical aerials that we are selling out of fleet for replacement, those margins are maintaining very well..

Great. Thanks a lot. I’ll pass it on..

Thank you..

Our next question comes from Nick Coppola with Thompson Research Group..

Good morning..

Good morning, Nick..

Going back to the weather really quickly, is there any way that you can just help us think about the size of the impacts there? In lieu of that any kind of qualitative way to think about it in terms of what – maybe what June look like after the rainy April and May or what other regions look like?.

I think if you go back to my comments – my prepared comments on utilization and the trajectory or the progression of utilization in the quarter, you can see that was pretty steady improvement and there was a big jump in earthmoving utilization after June and I believe that was heavily related to the weather drying up..

Nick, I would add, so we’ve got nearly 300 million in earthmoving products, something in that range. We have a largest waiting in the Louisiana – I think we were the Komatsu distributor in Louisiana and Arkansas. So we were heavily impacted with that product.

I’d also point out though on earthmoving related to rental rate, earthmoving is the only product that we had both year-over-year and sequential rate increases. While the rain started down and a year ago we were probably nearly 75% utilized with that product line, so maybe some level was difficult comp.

As John stated, again just refer to in his prepared comments, we are seeing improvements. When we’ll get back to 75%, I don't think that's our prediction, but we will continue to incrementally increase as this weather gets pass as absolutely.

And we were very specifically weighted heavy in Louisiana to Texas to a lesser degree, and so subsequently impacted more by weather kick quantify, but hope would that color will help you a little bit..

Nick, our utilization form April to today has improved about 600 basis points on earthmoving equipment and I think that’s heavily weighted to the weather just drying..

Okay. That’s helpful. And then moving over to new sales, you know clearly you talked about crane demand being weaker as a result of oil and gas, and there was actually a $90 million decline there on new crane sales. Can you back that out? It looks like new sales were actually up year-over-year.

So can you just talk more about broad trends and new equipment sale demand?.

Well, we think the crane market is going to continue to be difficult until we see some improvement in energy markets. Our earthmoving market in the second quarter was actually down year-over-year. I think our market share was up a little bit, so we had some year-over-year improvement.

But you can look at what Caterpillar's reporting and dears reporting on the construction equipment side of their business. We are seeing some declines there, but we think our earthmoving sales will going to be steady as it is, we think cranes will continue to be very difficult..

Okay. Thanks for taking my questions..

Our next question comes from Sean Egan with KeyBanc Capital Markets..

Good morning everyone..

Good morning..

I just want to quick start out with a question on the utilization cadence that you mentioned, you talked about July been 72%.

Can you help us understand how that compares on a year-over-year basis?.

We’re very close to flat year-over-year.

We are slightly behind – aerial work platforms remains probably about 150 basis points ahead year-over-year, cranes are still down 400 plus basis points, earthmoving I’ll reference to a while ago my comment to Nick that we were nearly 75% utilized this time last year and we’re nearly 70% utilization right now on earthmoving, so we’re still down 500 basis points.

For trucks in general we’re down just a tick. So very, very similar with the exception of earthmoving and cranes, cranes we don't have a lot of hope that it’s going to make a meaningful improvement, earthmoving we think will incrementally continue to improve..

Got it. Thanks for that. And then staying on earthmoving, I can appreciate that weather would certainly impact utilization as well as overall demand for earthmoving.

But do you think the part of that could have to do with project starts or projects moving into different phases? We certainly seen starts decline as these projects rollout and ramp up in a different phases, do you expect this kind of pressure to continue?.

Look, I think when you look at our earthmoving utilization we’re going up against a very, very difficult comp from a year ago. As Brad said, our utilization on earthmoving year ago was around 75% which is unusually high for that product line.

We had a bunch of projects going on in Louisiana that were in the dark phase and we took advantage of that had very high utilization. Our construction starts in the Gulf Coast are down significantly about over 50%, that’s against an unbelievably difficult comp.

I mean we had construction starts a year gone like anything we've ever seen in the Gulf Coast, so it’s a difficult comp. Yeah, I think there is not as many projects in the dark phase right now as there was a year ago..

Sean, I’d also add, keep in mind when we say earthmoving equipment, this is not 100% heavy site work construction equipment. It includes many excavators, skid steer, small, those are small excavators, and so that stuff goes on a multitude of projects in a variety of stages, not just grabbing and land clear.

In fact I’ll tell you those projects I just mentioned are where we can focus our investment over the last year or so..

Okay. Great. Thank you.

And if I can squeeze in one more quick clarification, the Gulf Coast region made up a small proportion of overall revenue and gross profit that has historically and I'm wondering if you attribute that all to the weather impact that we saw or maybe a confluence of other factors?.

Well I think is what I have just discussed, I think some of it certainly weather related. I mean the weather impact was very real for us, but again construction starts are down significantly year-over-year, so that has some impact..

And bear in mind that’s where we sale tremendous amount of crane when things are over. But with that said, there is still a tremendous amount of work going on in the Gulf Coast and Gulf Coast still drive 50% of our revenue..

Great. Thank you very much. That’s all for me..

Thank you..

We’ll take our next question from Kenneth Williamson with JPMorgan..

Can you guys hear me okay?.

Yeah. Good morning..

Sorry about that. I think I had my phone muted there. I just wanted to see if you can update your thought process on rental equipment purchases going forward. It seems like utilizations hanging in okay, what are your plans for – I know you talked about aerial work platform, but just as a general picture.

How much you anticipate you’ll be spending this year in CapEx?.

We don’t give CapEx guidance, but we will grow our aerial feet some this year. It’s going to be super aggressive growth, but we are running in such a high utilization level. It already makes sense for us to invest in our aerial feet. With that said earlier, we’ll be shrinking our crane feet and probably keeping our earthmoving fleet relatively..

Keith, the other thing I would mention. We stay – we’ve opened three Greenfields this year. We are going to open at least two more and those Greenfields typically have 70% to 80% of their product mix come from aerial work platform.

So when we think about growth a piece of that’s going to be driven by these, let’s just call it right now five Greenfields we are going to have in this calendar year..

Okay.

Do you anticipate that the number directionally is going to be in line with 2015, higher, lower?.

Total CapEx number?.

Yeah, total CapEx number..

I think we are going to stand on our existing comp..

Our gross CapEx will be lower than 2015..

And I guess I was just curious on the crane sale side of things.

Do you have any obligations to purchase new crane equipment going forward or do you have that might make it difficult to continue to digest that that inventory?.

We have no obligation to purchase crane unless we need them, so we are not buying any cranes right now..

Okay. All right. Thank you..

Your next question comes from Seth Weber with RBC Capital Markets..

Good morning everybody. I wanted to kind of go back and revisit some of the Gulf Coast discussion that we’ve had that you guys have kind of offer so far this morning and also the comment in the press release about fewer starts or lower project activity and kind of your comment earlier John about just starts have flowing down.

I mean what’s the right way to think about maintenance work for the region. Is there a scenario where new project slowdown, but maintenance work picks up kind of going forward, and is that enough to offset. I know you're not talking forward guidance, but just conceptually how you think about the business going forward.

I mean could rental revenue continued to see strength based just on maintenance projects? I guess this is my question if new starts slowdown..

Yes, I think the simple straight answer is yes. It could. The large projects have been somewhat of a blessing and a curve of blessing because just unprecedented amount of work activity and that will continue for some time. We‘ve all refer to the difficult comp.

From a year ago, from just a peer start standpoint, the curved piece and maybe they have the strong statement is it’s attracting a lot of competition and we are seeing on large project, not maintenance projects, not the typical small medium projects, but on this very large multibillion dollar projects, very aggressive pricing and there is an area where we think there is can have been a capacity issue that’s driven pricing spin those large projects.

But the answer to your question is yes, we can continue to grow with a traditional typical rhythm that exist here and the associate of maintenance..

And Seth, I would also point it out, although construction starts are down and again against a brutal comp. There is still a new industrial projects been announced here on a regular basis that are in the planning and the permitting phases. I mean this is such cheap natural death.

The Mississippi River is still driving a lot of activity in the chemical manufacturing and whatnot so. I shared I don't want to give the impression that the Gulf Coast is in the very vibrant market because it is..

Sure. No, that’s fair John. Thanks for that. And I guess just maybe Leslie a quick question for you. The SG&A line actually tick down here which was surprisingly – it was lower than we expected considering the new starts and all that stuff.

Was there something in that number that made it unusually high in the first quarter or is this a good run rate to think about going forward?.

I think the second quarter is a better run rate to look at going forward. We did have some unfavorable health claim experience in the first quarter which improved in the second quarter, so that was the bulk of the different fair. There were some other puts and takes, but that was the big difference fair.

So I would look at the second quarter as more of a run rate going forward..

Okay. Very helpful. Thank you everybody..

Thanks Lisa..

[Operator Instructions] We’ll take a follow-up question from Neil Frohnapple with Longbow Research..

Hi guys.

Just one follow-up from a higher level, I mean you guys been a big Komatsu dealer does, Komatsu buying Joy Global impact you guys longer-term and in anyway provide any sort of opportunities or is that something that’s really too early to be determined at this point?.

I think it’s too early to be determined, I think it’s a tremendous positive for Komatsu. I think it’s a great acquisition. I mean it puts on pretty much a level Plainfield or Caterpillar in the mining sector. We don't do a lot of mining. Komatsu owns most of their mining distribution that do that direct.

So I don’t see it being real meaningful to us going forward, but it’s certainly a major positive for Komatsu..

Okay. Thank you..

We’ll take our next question from Sean Egan with KeyBanc Capital Markets..

Hi guys. Just a quick follow-up. You gave the sequential cadence for utilization and you mentioned that rental rate was just down 20 basis points year-over-year. I was wondering if you could maybe provide the same level of detail on the rate perspective.

I mean all the same thing has move up sequentially?.

Look, we don’t like to give monthly rates. We’re going to give that on a quarterly basis. I can tell you we are comfortable with the guidance we've given all rates and we think will be just what we said flattish to down slightly for the remainder of the year..

Okay. Thank you..

And that concludes the question-and-answer session. I would like to turn the conference back over to John Engquist for any additional or closing remarks..

Well, I appreciate everybody being on the call. Look, we are still in a positive environment here on the rental side and we expect that’s going to be the case for some time to come. We think we’ve got some runway in front of us and we look forward to speaking with you on our next call. Thank you..

And that concludes today’s presentation. Thank you for your participation and you may now disconnect..