H&E Equipment Services’ second quarter revenues jumped 21.2 percent to $282.6 million compared with $233.1 for the same period last year. The Mid-Atlantic region, created after H&E’s recent acquisition of Burress Equipment, contributed $40.6 million of the $49.5 million increase, thus making same-store revenue increase relatively minimal.
Equipment rental revenue increased from $69.6 million to $75.2 million, an 8 percent hike. For the first six months of 2008, equipment rental jumped from $132.8 in 2007 to $146.4 million, a 10.2 percent hike. Total revenue increased 19.3 percent, from $442.9 million in the year-ago period, to $528.4 for the first six months of 2008.
EBITDA jumped 12.2 percent to $64.6 million compared to $57.6 million in last year’s second quarter, with the Mid-Atlantic region contributing $4.6 million of the $7 million increase. Income from operations increased 6 percent to $34.9 million compared to $32.9 million in last year’s first quarter, with the Mid-Atlantic region contributing $2.1 million. Net income increased to $16.1 million, or 45 cents per diluted share, compared to $15.2 million or 40 cents per diluted share in the year-ago quarter.
“We are pleased with our performance during the second quarter given the increasing macro economic challenges and the trickle-down effects on the non-residential construction markets,” said John Engquist, H&E’s president and CEO. “Despite very uncertain economic conditions, we achieved solid growth in revenues, EBITDA and net income. Our results this quarter clearly reflect the strength of our integrated business model and strong presence in geographic regions that give us tremendous exposure to the high growth oil and gas, petrochemical, energy and mining sectors.
“With a continuing credit crisis and skyrocketing construction costs, we believe the non-residential construction markets may be negatively impacted during the second half of this year. We are taking the necessary steps now to ensure that we continue to deliver solid results. These steps include a measured reduction in our fleet to adjust to current demands and further cost reductions. We intend to use excess cash for general business purposes, which may include the repayment of debt and/or the repurchase of shares.”
H&E Equipment Services chief financial officer Leslie Magee noted that Florida, Southern California and the mid-Atlantic regions continue to be the most challenging markets for H&E.
The company said the new crane market for sales has been strong, but were partially offset by a decline in aerial and earthmoving sales.
H&E’s outlook for the remainder of 2008 is cautious.
“We have not benefited from the increase in demand in our rental business that we normally see this time of the year,” Engquist. “As a result, our time utilization is running below expected levels. In addition, we continue to see rental rate pressures in our softer markets and the rate pressures are beginning to affect other markets within our footprint. Some manufacturers have announced higher than desired inventory levels and significant workforce reductions. Based on these and other factors, we expect to slow our capital spending and reduce our rental fleet between now and the end of the year. This fleet reduction is a significant change from our original plan. A smaller fleet, lower time utilization and continued rate pressures are the primary drivers of the revision to our 2008 estimates. Accordingly we are lowering our 2008 outlook.”
Based in Baton Rouge, La., H&E Equipment Services is No. 9 on the RER 100.
