H&E Equipment Services last week announced that in the first quarter ended March 31, revenues grew in all segments, reflecting a 17.6-percent year-over-year increase to $134.9 million in total revenues from $114.7 million in the first quarter of 2010. Rental revenues increased 33.0 percent from a year ago to $48.5 million compared with $36.5 million in the first quarter of 2010.
EBITDA increased 93.6 percent to $21.3 million from $11.0 million, yielding a margin of 15.8 percent compared to 9.6 percent of revenues a year ago. Gross margins were 26.0 percent as compared to 20.8 percent a year ago. Rental gross margins increased to 35.4 percent compared to 21.7 percent a year ago. Average time utilization (based on units available for rent) increased to 61.0 percent compared to 49.7 percent last year. Average time utilization (based on original equipment cost) increased to 64.9 percent compared to 51.2 percent a year ago.
“We are extremely pleased with our first-quarter results and the ongoing improvements in our business,” said John Engquist, H&E Equipment Services’ president and CEO. “Despite normal seasonality that was compounded by historically inclement weather in many of our end markets, our business delivered solid year-over-year improvements in revenue, gross profit and EBITDA. The trends in our rental business remain particularly strong as revenue increased 33.0 percent, gross profit increased 116.7 percent and gross margins increased from 21.7 percent to 35.4 percent despite a slight decline in rental rates from a year ago.”
Average rental rates turned positive in March on a year-over-year basis, the company said. Dollar utilization was 27.9 percent in the first quarter compared to 22.0 percent a year ago. Average rental fleet age at March 31, was 43.2 months compared to an industry average of approximately 53 months.
“The second quarter has started on a positive note with solid year-over-year gains in April rental rates,” Engquist said. “Visibility in our distribution business remains limited. While new earthmoving equipment sales were strong, the lack of large crawler crane sales negatively impacted new equipment sales compared to the fourth quarter.”
New equipment sales increased 6.9 percent to $29.2 million from $27.3 million a year ago. Used equipment sales increased 14.8 percent to $15.4 million compared to $13.4 million a year ago. Parts sales increased 9.9 percent to $21.6 million from $19.6 million in the first quarter of 2010. Service revenues increased 10.0 percent to $12.6 million compared with $11.5 million a year ago.
At the end of the first quarter of 2011, the original acquisition cost of the company’s rental fleet was $699.7 million, an increase of $39.7 million from $660.0 million at the end of the first quarter of 2010. Dollar utilization was 27.9 percent compared to 22.0 percent for the first quarter of 2010.
Selling, general and administrative expenses for the first quarter of 2011 were $38.1 million compared with $35.9 million last year, a $2.2 million, or 6.2-percent increase. SG&A expenses in the first quarter of 2011 declined as a percentage of total revenues to 28.2 percent as compared to 31.3 percent last year. The increase in SG&A expenses was primarily attributable to higher commission and incentive pay on higher revenues and an increase in employee headcount.
Loss from operations for the first quarter of 2011 was $2.9 million, or 2.1 percent of revenues, compared with loss from operations of $11.9 million, or 10.4 percent of revenues, a year ago. Net loss was $6.5 million, or ($0.19) per diluted share, in the first quarter of 2011 compared to a net loss of $12.1 million, or ($0.35) per diluted share, in the first quarter of 2010.
“Our outlook for the second quarter is positive as we expect the improvement in industrial construction markets to accelerate,” Engquist said. “However, we do not expect a broad recovery in non-residential construction markets to occur until 2012. In spite of this, we expect our losses to moderate for the remainder of 2011. The activity in our industrial markets remains strong, especially in our Gulf Coast and Intermountain regions as a result of rising oil and commodity prices. Demand for early cycle earthmoving equipment continues to increase and we are beginning to see improved rental rates. With a solid capital structure and excellent liquidity, we believe we have positioned our business very well to take advantage of any improvements in market conditions.”
Baton Rouge, La.-based H&E Equipment Services is No. 11 on the RER 100. It has 67 full-service facilities throughout the West Coast, Intermountain, Southwest, Gulf Coast, Mid-Atlantic and Southeast regions of the United States.