BATON ROUGE, La. — H&E Equipment Services, which completed its merger with ICM Equipment Co. in June, reported increased revenue for the second quarter ended June 30, 2002. On a historical basis, the company reported revenues of $76.8 million, up year-over-year from $70.1 million.
Equipment rentals accounted for 35.2 percent of total revenue, new equipment sales accounted for 21.4 percent, parts sales and service revenue for 22 percent and used equipment sales for 17 percent. Equipment rental accounted for 53.3 percent of the gross profit, compared to 31.2 percent for parts sales and service revenue, 8.8 percent for used equipment sales, and 7.9 percent for new equipment sales.
At the end of the second quarter, the average age of the rental fleet was 32.2 months and the company's balance outstanding on its revolving line of credit was 76.6 percent, with an additional $72 million in available borrowings.
For the three-month period ended June 30, total pro forma revenue — including the revenues of ICM Equipment and H&E as if it had occurred at the beginning of the periods represented — was $115.9 million, compared to $124 million for the same period last year. The 6.6 percent decrease was attributed to a decline in new and used equipment sales and a decline in rental revenues. The decline was partially offset by an increase in parts sales and service revenue. The equipment sales decrease was primarily a result of lower crane sales and customers not making significant capital investments because of the uncertainty in the economy. Equipment rentals declined, year-over-year, from $44.8 million to $42.3 million, which the company attributes to a decline in rental rates, lower rental fleet and slightly lower time utilization and equipment dollar utilization.
“We are pleased to have successfully completed the merger of Gulf Wide [aka Head & Engquist Equipment] and ICM Equipment Co.,” said president and CEO John Engquist. “We feel our second quarter results supports the value of our integrated business model. At a time when equipment companies are experiencing declining revenues and shrinking gross margins due to lower rental rates and an over-capacity of equipment in the market place, our parts sales and service revenue has increased and continue to generate high margins.”
Engquist added that the company's integration strategy would help H&E at a time when “we have seen several major construction projects postponed or delayed. The weak economy has directly impacted our new and used equipment sales, although we have been able to maintain strong margins. This demonstrates the value of our fully integrated model and having a separate retail sales force.”
Engquist added that H&E has centralized the company's equipment purchasing process. “We believe equipment sharing will have a significant impact on our rental revenues and dollar utilization going forward.”
Gary Bagley, CEO of ICM, is now chairman of H&E Equipment Services. Based in Salt Lake City and Baton Rouge, La., H&E is No. 10 on the RER 100 and has 47 branches.
