H&E Equipment Services Reports Q1 Results

May 10, 2007 • Baton Rouge, La.-based H&E Equipment Services, Inc. today announced operating results for the first quarter ended March 31, 2007. The company's revenues increased 15.1 percent to $209.7 million compared to $182.2 million a year ago. EBITDA increased 25.7 percent to $52.3 million compared to $41.6 million of EBITDA, as adjusted, a year ago.

 

Income from operations increased 91.4 percent to $28.9 million compared to last year's $15.1 million. Income from operations, as adjusted, increased 25.1 percent to $28.9 million. Net income increased 209.5 percent to $12.1 million compared to net income of $3.9 million a year ago. Net income, as adjusted, increased 18.9 percent to $12.1 million.

 

Total gross margin increased to 31.3 percent from 30.7 percent a year ago. On a comparative basis, the company's operating results for the first quarter a year ago were negatively impacted by an $8 million non-recurring expense associated with the termination of a management services agreement related to the company's initial public offering in February. This expense had a positive impact on the company's year-over-year comparisons. The as adjusted operating results presented in this release exclude the $8 million expense from the three months ended March 31, 2006.

 

"Our first quarter results were very solid despite the fact it is historically our softest quarter of the year,” said John Engquist, H&E Equipment Services' president and CEO. “In January and February of this year, we experienced more extreme weather conditions in our Gulf Coast and Intermountain regions than in the prior year, which resulted in a decline in our year-over-year dollar returns. However, for the month of March, we experienced record revenue and solid increases in dollar utilization. In spite of the challenging weather conditions at the beginning of the year, our business delivered an increase in both top and bottom line performance, which reflects the continued strength in the markets we serve."

 

"Top line growth during the first quarter was driven by a 21.7-percent increase in new equipment sales and a 17-percent increase in equipment rentals while our combined parts and service revenues reflected growth of 19.3 percent," said Leslie Magee, H&E Equipment Services' chief financial officer. "We continued to experience a slight decrease in used equipment sales, which declined 2.5 percent from a year ago. This trend is simply the result of improved new equipment availability from many of our manufacturers."

 

Engquist said the company's outlook 2007 remains positive because the fundamental drivers of the business remain strong. He said the company sees no signs of reduced capital spending in the markets it serves, as evidenced by the 21.7-percent increase in new equipment sales this quarter. H&E also expects the Gulf region hurricane protection and rebuilding efforts to ramp up later this year and continue for some time.