Baton Rouge, La.-based H&E Equipment Services last week announced that total second-quarter revenues increased $64.8 million to $202.5 million from $137.7 million in the second quarter of 2005.
Second-quarter equipment rental revenues were $64 million compared with $45.6 million for the second quarter of 2005, reflecting an increase of $18.4 million, or 40.4 percent. At the end of the second quarter of 2006, the original acquisition cost of the rental fleet was $614.3 million, up $128.2 million from $486.1 million at the end of the second quarter of 2005. For the second quarter of 2006, dollar utilization increased to 42.2 percent from 38.2 percent for the second quarter 2005.
Second-quarter new equipment sales were $56.9 million compared with $33.4 million for the second quarter of 2005, reflecting an increase of $23.5 million, or 70.4 percent.
Second-quarter used equipment sales were $36.1 million, representing a $12.2 million, or 51 percent, increase from $23.9 million for the second quarter of 2005. Parts sales for the second quarter were $21.2 million, representing a $3.4 million, or 19.1-percent, increase compared with $17.8 million for the second quarter of 2005.
Service revenues for the second quarter of 2006 were $13.4 million, representing a $3.5 million, or 35.4 percent, increase compared with $9.9 million for the second quarter of 2005.
EBITDA, net income before interest expense, income taxes and depreciation and amortization, for the second quarter increased $27.2 million, or 93.8 percent, to $56.2 million from $29 million in the second quarter of 2005. EBITDA as a percentage of total revenues increased to 27.8 percent compared with 21.1 percent in the second quarter of 2005.
Revenues increased 47.1 percent to $202.5 million. EBITDA increased 93.8 percent to $56.2 million. Income from operations increased 138.1 percent to $35 million. Net income increased $15.5 million to $19.8 million. Rental rates increased approximately 11 percent and gross margin increased in all segments.
"We are extremely pleased with the performance of our business during the second quarter," said John Engquist, H&E Equipment Services' president and CEO. "Every major component of our business delivered solid increases in revenue and gross profit, which resulted in record quarterly net income and EBITDA for our company. Our record results were driven by both the continued strong demand for commercial construction equipment and services throughout every market we serve as well as the ability of our integrated business model to capitalize on this demand. Our strong results reflect the first full quarter of the results of operations of Eagle High Reach. We are very pleased with the performance of the operations we acquired through Eagle and our success in integrating these operations into our overall business. We also continue to be very pleased with our performance thus far this year and are encouraged by the recent trends in non-residential construction spending and its positive impact on our performance."
“Demand remains very strong for new cranes, aerial work platforms and earthmoving equipment,” said Leslie Magee, H&E Equipment Services' chief financial officer. “Strong demand for these same types of machines resulted in a 51-percent increase in used equipment sales during the quarter. Our combined parts and service revenues increased 24.9 percent, or $6.9 million, from a year ago and continue to be the result of higher new and used equipment sales as well as increased customer demand."
H&E also reported that it closed the transactions associated with restructuring its senior debt, which the company expects will have a positive impact on its future interest expense as well as provide the company with greater financial flexibility going forward.
“Our outlook remains very positive for the remainder of this year as we continue to see strength in non-residential construction spending and remain encouraged by our strong performance this quarter and the current trends in every aspect of our business," said Engquist.
The company is increasing its 2006 revenue outlook from its previously announced range of $710 million to $740 million to approximately $750 million to $780 million.
2006 EBITDA is expected to decrease to a range of approximately $141 million to $151 million, which includes the impact of nonrecurring charges. These nonrecurring charges are comprised of an estimated $41 million loss on early extinguishment of debt related to the company's debt restructuring, which will be recorded in the third quarter and a one-time charge of $8 million to selling, general and administrative expenses associated with the termination of a management services agreement concurrent with the company's initial public offering recorded in the first quarter of 2006.
The company is also revising its 2006 earnings guidance from the previously announced range of $1.25 to $1.45 per share to approximately 55 cents to 65 cents per share based on 37 million diluted common shares outstanding.
H&E Equipment Services is No. 11 on the RER 100.