H&E Equipment Services posted a 40.7-percent revenue hike in the second quarter, with $184.3 million compared with $131 million in the second quarter of 2010. Rental revenues jumped 33.8 percent to $55.8 million, compared with $41.7 million in the year-ago quarter, with higher time utilization, better rates and a larger fleet.
Net income increased to $2.7 million compared with a $7.1 million net loss a year ago. EBITDA was $35.2 million, compared to $18.6 million in the year-ago quarter, an 89.1-percent leap.
New equipment sales jumped 100 percent year over year driven by increased crane and earthmoving sales.
Gross margins were 25.9 percent, compared to 24.7 percent a year ago, with rental gross margins coming in at 40.7 percent, compared to 31.1 percent a year ago, a 30.9-percent improvement. Dollar utilization was 31 percent compared to 25.3 percent a year ago.
Average rental rates jumped 6.4 percent compared to a year ago and improved 4.2 percent from the first quarter of this year. Average rental fleet age on June 30 was 43 months, down slightly from the end of the first quarter.
“With 41-percent revenue growth on a year-over-year basis and 37 percent on a sequential basis, the current trends in our business are particularly encouraging despite a commercial construction environment that remains relatively dormant,” said H&E Equipment Services’ president and CEO John Engquist. “The momentum in our rental business continued as revenue climbed 33.8 percent, gross profit increased 75.3 percent, and gross margins grew to 40.7 percent, compared to 31.1 percent, a year ago. We were pleased with the progress that we made on rental rates during the quarter. Our new equipment sales were particularly strong in the second quarter as strong demand for cranes and earthmoving machines resulted in a 100-percent, or $29 million, revenue increase from a year ago. As a result of significant revenue growth in all of our operating segments, gross profit increased 47.6 percent, EBITDA grew 89.1 percent and we achieved bottom-line profitability with EPS improving $0.28 from a year ago.”
Engquist was cautious in his expectations for the remainder of 2011. “Due to the timing of certain crane and earthmoving deliveries, we expected the second quarter to potentially be our strong sales period of the year,” he said. “While we expect continued sequential and year-over-year improvement in our rental business through the third quarter, we are more cautious and have less visibility on the distribution side of our business.”
Parts sales increased 9.5 percent to $24.9 million from $22.8 million in the second quarter of 2010. Service revenues increased 5.4 percent to $13.2 million compared to $12.6 million a year ago.
Income from operations for the second quarter of 2011 was $10.3 million, or 5.6 percent of revenues compared with loss from operations of $4.3 million, or 3.2 percent of revenues in the year-ago quarter.
At the end of the second quarter, the original acquisition cost of the company’s rental fleet was $724.9 million, an increase of $67.2 million from $657.7 million at the end of the second quarter of 2010. The OEC was $685.1 million at the end of 2010.
Based in Baton Rouge, La., H&E Equipment Services is No. 12 on the RER 100.
