Baton Rouge, La.-based H&E Equipment Services last week announced operating results for the first quarter ended March 31, 2006. Total first-quarter revenues increased 41.7 percent to $182.2 million from $128.6 million in the first quarter of 2005 and include $3 million of revenues from the company’s acquisition of Eagle High Reach.
"Every segment of our business performed strongly during the first quarter," said John Engquist, H&E Equipment Services president and CEO. "Demand for construction equipment across all of the markets we serve remains very high and our integrated business is clearly benefiting from this increased demand. We are very pleased with our results for the quarter and the current trends in our business. We are also pleased with the progress we have made integrating the operations of Eagle High Reach into H&E and its performance this quarter as well."
For the second consecutive quarter, new equipment sales were strong, up 83.8 percent, or $25.4 million, from the first quarter a year ago. Sequentially, this compares to a 55.6 percent year-over-year increase during the fourth quarter. Rental revenues were also strong, increasing 33.0 percent, or $13.4 million, versus the first quarter of 2005. The increase in rental revenues was attributable to higher rental rates, larger fleet size and the impact from the company’s recently acquired West Coast branches.
"Gross margins increased to 30.7 percent compared to 28.5 percent a year ago,” said Leslie Magee, H&E Equipment Services chief financial officer. “As a result, income from operations increased 110.0 percent to $23.1 million compared to $11.0 million a year ago.”
"Given our first-quarter performance and the current trends in the non-residential construction business, we are increasing our outlook for 2006," said Engquist. "Based on currently available information, we are increasing our 2006 revenue outlook from our previously announced range of $675 million to $690 million to approximately $710 million to $740 million. 2006 EBITDA is expected to be approximately $180 million to $190 million, up from our previous guidance of between $170 million to $180 million. We are also increasing our 2006 earnings guidance from the previously announced range of $1.00 to $1.15 per share based on 38.1 million shares outstanding to approximately $1.25 to $1.45 per share based on 37.0 million shares outstanding."
First-quarter equipment rental revenues were $54.0 million compared to $40.6 million for the first quarter of 2005, reflecting an increase of $13.4 million, or 33.0 percent. At the end of the first quarter of 2006, the original acquisition cost of the company's rental fleet (adjusted for the Eagle acquisition) was $600.5 million, up $140.7 million from $459.8 million at the end of the first quarter of 2005. For the first quarter of 2006, dollar utilization increased to 39.2 percent from 35.1 percent for the first quarter 2005.
First quarter gross profit from equipment rentals was $26.5 million compared to $16.9 million for the same time period last year, reflecting an increase of $9.6 million.
Net income during the first quarter increased $8.9 million to $9.9 million from $1.0 million in the first quarter of 2005. Net income as a percentage of revenues increased to 5.4 percent from 0.8 percent in the first quarter of 2005.
EBITDA for the first quarter increased $17.2 million, or 70.5 percent, to $41.6 million from $24.4 million in the first quarter of 2005. EBITDA as a percentage of total revenues increased to 22.8 percent compared to 19.0 percent in the first quarter of 2005.
H&E Equipment Services is No. 11 on the RER 100.
