H&E Equipment Services Reports Third Quarter 2010 Results
H&E Equipment Services, Inc. (NASDAQ: HEES) today announced results for the third quarter ended September 30, 2010. Total revenue was $153.8 million, compared with $175.6 million for the same period last year. Gross profit was $37.9 million, compared with $40.0 million a year ago. Operating income was $1.5 million, compared with $5.2 million for the same period last year. Net loss was $3.8 million, or ($0.11) per diluted share, compared to a net loss of $2.3 million, or ($0.07) per diluted share, a year ago. EBITDA for the third quarter was $24.5 million, compared to $29.3 million, a year ago.
THIRD QUARTER 2010 HIGHLIGHTS
- Total revenues increased 17.4% from the second quarter.
- Rental revenues increased 7.0% from a year ago and 15.8% from the second quarter. The third quarter delivered positive year over year results in rental segment for the first time since late 2008.
- New equipment sales increased 64.7% from the second quarter and were near year ago levels.
- Gross margins increased to 24.6%. Sequentially, gross margins were consistent with the second quarter. Sequential EBITDA growth was 31.3%, resulting in higher margins as a percentage of revenues.
- Rental gross margins increased to 37.5% in the third quarter reflecting a significant improvement on both a year over year and on a sequential basis.
- Increased average time utilization (based on units available for rent) to 62.3%, compared to 54.9% in the second quarter and 54.3% a year ago. Increased average time utilization (based on original equipment cost) to 65.9%, compared to 57.9% in the second quarter and 57.1% a year ago.
- Rental rates improved 1.8% sequentially from the second quarter, the first quarter of positive sequential gains in rental rates since the second half of 2008.
- Dollar utilization was 29.2% in the third quarter, an increase of approximately 400 basis points on both a year over year and on a sequential basis.
- Continued to reinvest in rental capital expenditures with improving market conditions. Net rental capital expenditures (including inventory transfers) were $21.8 million.
- Rental fleet age at September 30, 2010, was 43.0 months compared to an industry average near 52 months.
“Market conditions continued to improve during the third quarter and as a result, areas of our business delivered solid sequential gains,” said John Engquist, H&E Equipment Services’ president and chief executive officer. “Total revenue increased 17.4% sequentially from the second quarter, driven by continued growth in our rental business and increased new equipment sales. Due to improving rental demand, we increased both our overall rental capacity and the physical utilization of our fleet. We were also very pleased to achieve sequential rental rate improvement of 1.8%. As a result, rental revenue increased 15.8% from the second quarter and 7.0% from a year ago. Our third quarter results also reflected significant increases in rental gross profit and margins on both a sequential and on a year over year basis.”
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