H&E Equipment Services last week announced a 32.6-percent revenue increase for the third quarter of 2007, rising from $204.1 million in last year’s third quarter to $270.6 million this year. Gross profit jumped 22 percent to $83.9 million, compared with $68.7 million for the year-ago period. Rental volume grew 12.2 percent from $67.3 million to $75.6 million.
The results reflect the acquisition of distributor J.W. Burress Inc., which was completed Sept. 1.
EBITDA increased 21 percent year over year, from $57.5 million to $69.6 million, while income from operations leaped 21.5 percent from $34.9 million to $42.24 million.
Net income increased to $20.2 million compared to a net loss of $11.5 million a year ago Total gross margin dropped from 33.7 percent in the year-ago period to 31 percent in the recently concluded quarter.
“All our major business segments delivered improved year-over-year performance,” said president and CEO John Engquist. “We continue to experience strong new equipment sales as the demand for cranes continues to increase, resulting in a 56-percent increase. Rental revenues improved 12.2 percent. Dollar utilization decreased to 41.9 percent compared with 42.4 percent a year ago and improved from 41.5 percent in the second quarter of this year. Business currently operates primarily as a distributor with lower dollar utilization than a pure rent-to-rent business. Excluding the one month of Burress’ rental results from the quarter, our dollar utilization increased over both the prior year and the last quarter to 42.7 percent. Our integrated business model and focus on commercial high-growth markets continues to deliver strong returns. The petrochemical, oil patch, mining and private non-residential construction sectors continue to show strength and are the key drivers of our business.
“We also anticipate increased spending in our coastal regions related to rebuilding and hurricane-protection projects. With the completion of the acquisition of J.W. Burress on Sept. 1, we have now contiguously expanded our presence throughout the mid-Atlantic region, which affords us additional significant growth opportunities, including the expansion of their rental operations.”
Organic growth was 27.6 percent or $56.4 percent, Engquist said, continuing that Burress contributed $10.1 million in revenues for the month of September.
H&E now expects 2007 revenue in the range of $995 million to $1.007 billion, and is raising its 2007 EBITDA guidance in the range of $246 million to $252 million. The company now expects 2007 earnings per share from $1.70 to $1.75.
At the end of the third quarter, the original acquisition cost of H&E’s rental fleet was $779.9 million, including $74 million of original acquisition cost of Burress’ rental fleet, which is an increase of $131.8 million from $648.1 million at the end of the third quarter of 2006.
New equipment sales were $94.7 million for the quarter, compared with $607 million last year, a 56 percent year over year jump. Used equipment sales leapt 49.7 percent year over year, from $29.7 million to$44.5 million.
Parts sales jumped 27.2 percent, and service revenues were up 19.7 percent.
For the first nine months of the year, total revenues jumped from $588.9 million in 2006 to $713.5 million this year.
In other H&E news, the company has been named an authorized Komatsu Utility dealer for Nevada and Southern California. The company has nine full-service locations through its Utah, Nevada and Southern California service territory.
Based in Baton Rouge, La., H&E Equipment Services is No. 9 on the RER 100.
