H&E Equipment Services Reports Third Quarter 2012 Results

H&E Equipment Services, Inc. (NASDAQ: HEES) today announced results for the third quarter ended September 30, 2012. In the third quarter of 2012, the Company completed its successful offering of new 10-year 7% senior unsecured notes, the repurchase and redemption of its then-outstanding 8 3/8% senior unsecured notes and the payment of a dividend to shareholders of approximately $246 million. The Company’s operating results for this quarter include a $10.2 million non-recurring item associated with the premium paid to repurchase and redeem the old notes and the write-off of unamortized deferred transaction costs associated therewith.

  • Revenues increased 11.0% to $204.5 million versus $184.3 million a year ago.
  • Net income was $3.7 million in the third quarter compared to $4.8 million a year ago. Adjusted Net Income increased $6.1 million to $10.9 million compared to net income of $4.8 million a year ago.
  • Adjusted EBITDA increased 38.3% to $55.9 million from $40.4 million, yielding a margin of 27.3% compared to 21.9% of revenues a year ago.
  • Rental revenues increased 27.2%, or $16.6 million, to $77.8 million due to improved rates, a larger fleet compared to a year ago and strong demand.
  • New equipment sales increased 5.3%, or $2.5 million, to $49.0 million, largely due to higher crane sales.
  • Gross margin was 32.7% as compared to 29.2% a year ago. Rental gross margins increased to 48.9% compared to 44.0% a year ago.
  • Average time utilization (based on original equipment cost) increased to 72.9% compared to 71.8% a year ago and 73.5% in the second quarter of 2012. Average time utilization (based on units available for rent) was 68.9% compared to 68.9% last year and 68.7% last quarter.
  • Average rental rates increased 10.2% compared to a year ago and improved 2.9% compared to the second quarter of this year.
  • Dollar utilization was 36.7% as compared to 33.7% a year ago.
  • Average rental fleet age at September 30, 2012 was 38.6 months, down from 40.4 months at the end of the last quarter and significantly younger than the industry average age of 48 months.
  • Successful notes offering of $530 million of new 10-year 7% senior unsecured notes. Proceeds were used primarily to repurchase or redeem our then-outstanding 8 3/8% senior unsecured notes and fund a dividend to shareholders of approximately $246 million.

“Our rental business remained very strong in the third quarter and we believe this is indicative of a secular shift occurring in the market that will continue into 2013,” said John Engquist, H&E Equipment Services’ president and chief executive officer. “As a result of increasing demand across all our end user markets, we invested more than $60 million in our fleet, which marked the second consecutive quarter of record levels of fleet investment in our company. Our fleet was approximately 18% larger at the end of the third quarter than at the end of 2011. Despite our record fleet investment this year, utilization is strong and rental rate gains are robust. The distribution side of our business continues to perform solidly as well, with new equipment sales up 5.3% from a year ago. As we move into year end, there is the possibility we could experience increased demand as our customers may look to take advantage of tax incentives before the end of the year.”

If you liked this article you might like

United Rentals Stock Jumps as $1.3 Billion Neff Acquisition Becomes Official

These 7 Stocks Are Spiking on Big Volume

High Yield Bond Valuations Remain Attractive, Says Portfolio Manager

3 Hold-Rated Dividend Stocks: AI, HEES, TLP

3 Hold-Rated Dividend Stocks: OXBR, HEES, TAXI