H&E Equipment Services last week announced a first-quarter revenue increase of 15.1 percent, posting $209.7 million compared with $182.2 in its first quarter last year.
EBITDA jumped 25.7 percent to $52.3 million for the first quarter, compared with $41.6 million in the same period last year. Income from operations leaped 91.4 percent year over year, from $15.1 million a year ago to $28.9 million this year. Net income jumped 209.5 percent to $12.1 million compared to net income of $3.9 million a year ago.
On a comparative basis, the company’s operating results for the first quarter of 2006 were negatively impacted by an $8 million non-recurring expense associated with the termination of a management services agreement related to the company’s initial public offering in February. Without including this adjustment, H&E’s net income and income from operations increases were 18.9 percent and 25.1 percent respectively.
Equipment rental revenues were $63.2 million, up from $54 million in the first quarter of 2006. At the end of the first quarter, the original acquisition cost of the rental fleet was $653 million, up 52.5 percent from $600.5 million at the end of Q106, including fleet acquired through the acquisition of Eagle High Reach. Gross profit from equipment rentals was $31.1 million, compared to $26.5 million in the first quarter of 2006.
“Our first-quarter results were very solid despite the fact it is historically our softest quarter of the year,” said John Engquist, H&E Equipment Services’ president and CEO. “In January and February of this year, we experienced more extreme weather conditions in our Gulf Coast and intermountain regions than in the prior year, which resulted in a decline in our year-over-year dollar returns. However, for the month of March, we experienced record revenue and solid increases in dollar utilization. In spite of the challenging weather conditions at the beginning of the year, our business delivered an increase in both top- and bottom-line performance, which reflects the continued strength in the markets we serve.”
“Top-line growth during the first quarter was driven by a 21.7-percent increase in new equipment sales and a 17-percent increase in equipment rentals while our combined parts and service revenues reflected growth of 19.3 percent,” said H&E chief financial officer Leslie Magee. “We continued to experience a slight decrease in used equipment sales, which decline 2.5 percent from a year ago. This trend is simply the result of improved new equipment availability from many of our manufacturers. Our gross margin remained strong during the first quarter at 31.3 percent, up from 30.7 percent a year ago.”
H&E maintains an optimistic outlook for the remainder of 2007. “The fundamental drivers of our business remain very strong and our market footprint represents many of the fastest-growing regions in the U.S., with very high levels of non-residential construction activity,” said Engquist. “We see no signs of reduced capital spending in the markets we serve as evidenced by our 21.7 percent increase in new equipment sales this quarter. Furthermore, the major industries we serve, including the petrochemical sector, energy sector and mining industry all remain very strong. We also expect the Gulf region hurricane protection and rebuilding efforts to ramp up later this year and continue for some time.”
H&E is expecting 2007 revenue in the range of $900 million to $920 million, with EBITDA in the range of $232 million to $245 million. The company expects 2007 earnings per share in the range of $1.63 to $1.85 per share.
Based in Baton Rouge, La., H&E Equipment Services is No. 9 on the new RER 100.
