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| H&E Equipment Services Reports First Quarter 2010 Results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BATON ROUGE, La., May 06, 2010 (BUSINESS WIRE) --H&E Equipment Services, Inc. (NASDAQ: HEES) today announced results for the first quarter ended March 31, 2010. FIRST QUARTER 2010 SUMMARY
"As we expected, the first quarter was extremely challenging as a result of the continuous softness in our end markets combined with seasonality and severe weather that occurred across much of our footprint," said John Engquist, H&E Equipment Services' president and chief executive officer. "At this point, our expectations for 2010 are unchanged and therefore, we anticipate that segments of our business will continue to see low demand for our products and services. We are, however, encouraged to see improving residual values on used equipment, increased activity in our earthmoving business, which is an early cycle product, and an increase in our on rent levels that are accelerating as we move into the second quarter." "We remain focused on maintaining the strength of our liquidity position and balance sheet. We managed our fleet through continued reductions of $15.1 million as we entered 2010 with very weak levels of demand. Our fleet utilization bottomed in January reaching a low point of less than 48% of units on rent. Beginning in February, we achieved steady improvement and we are currently maintaining approximately 53% of our units on rent," commented Leslie Magee, H&E Equipment Services' chief financial officer. "With the continuation and acceleration of these positive trends in the utilization of our fleet since the end of the first quarter, we expect sequential improvement in our rental business moving forward." FINANCIAL DISCUSSION FOR FIRST QUARTER 2010: Revenue Total revenues decreased 38.4% to $114.7 million from $186.2 million in the first quarter of 2009. Equipment rental revenues decreased 34.3% to $36.5 million compared with $55.5 million in the first quarter of 2009. New equipment sales decreased 57.4% to $27.3 million from $64.1 million in the first quarter of 2009. Used equipment sales decreased 16.5% to $13.4 million compared to $16.1 million in the first quarter of 2009. Parts sales decreased 24.6% to $19.6 million from $26.0 million in the first quarter of 2009. Service revenues decreased 25.7% to $11.5 million compared to $15.5 million a year ago. Gross Profit Gross profit decreased 52.5% to $23.9 million from $50.3 million in the first quarter of 2009. Gross margin was 20.8% for the quarter ended March 31, 2010 as compared to 27.0% for the quarter ended March 31, 2009. The reduced gross margin percentage in the current quarter is primarily due to lower gross margins from the rental operations. On a segment basis, gross margin on rentals decreased to 21.7% from 36.7% in the first quarter of 2009 due to declines in rental rates and time utilization. On average, rental rates declined 13.9% as compared to the first quarter of 2009. Time utilization decreased to 49.7% from 56.1% a year ago. Gross margin on new equipment sales was 8.7% as compared to 13.6% in the first quarter a year ago. Gross margin on used equipment sales was 20.0% which was down from 21.2% a year ago. Gross margin on parts sales decreased to 27.4% from 28.8%. Gross margin on service revenues decreased to 61.9% from 63.1% in the prior year. Rental Fleet At the end of the first quarter of 2010, the original acquisition cost of the Company's rental fleet was $660.0 million, down $103.2 million from $763.2 million at the end of the first quarter of 2009 and down $15.1 million from $675.1 million at the end of 2009. Dollar utilization was 22.0% compared to 28.7% for the first quarter of 2009. Dollar returns decreased reflecting lower year-over-year average rental rates and lower time utilization. Selling, General and Administrative Expenses SG&A expenses for the first quarter of 2010 were $35.9 million compared with $39.1 million last year, a $3.2 million, or 8.2%, decrease. The decrease was primarily attributable to lower wages, incentive pay, and benefits. For the first quarter of 2010, SG&A expenses as a percentage of total revenues were 31.3% as compared to 21.0% a year ago. Income (Loss) from Operations Loss from operations for the first quarter of 2010 was $11.9 million, or 10.4% of revenues, compared with income from operations of $11.1 million, or 6.0% of revenues, a year ago. Interest Expense Interest expense for the first quarter of 2010 decreased $0.9 million to $7.3 million from $8.2 million a year ago due primarily to lower average interest rates, debt under the senior secured credit facility and floor plan payables. Net Income (Loss) Net loss was $12.1 million, or ($0.35) per diluted share, compared to net income of $2.2 million, or $0.06 per diluted share, a year ago. The effective income tax rate was 37.0% compared to 30.8% a year ago. EBITDA EBITDA for the first quarter of 2010 decreased $27.1 million to $11.0 million compared to $38.1 million a year ago. EBITDA, as a percentage of revenues, was 9.6% compared to 20.4% a year ago. Non-GAAP Financial Measures This press release contains certain Non-GAAP measures (EBITDA). Please refer to our Current Report on Form 8-K for a description of our use of these measures. EBITDA as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Additionally, these Non-GAAP measures are not measurements of financial performance or liquidity under GAAP and should not be considered as alternatives to the Company's other financial information determined under GAAP. Conference Call The Company's management will hold a conference call to discuss first quarter results today, May 6, 2010, at 10:00 a.m. (Eastern Time). To listen to the call, participants should dial 913-312-1503 approximately 10 minutes prior to the start of the call. A telephonic replay will become available after 1:00 p.m. (Eastern Time) on May 6, 2010, and will continue through May 14, 2010, by dialing 719-457-0820 and entering confirmation code 5442546. The live broadcast of the Company's quarterly conference call will be available online at www.he-equipment.com or www.earnings.com on May 6, 2009, beginning at 10:00 a.m. (Eastern Time) and will continue to be available for 30 days. Related presentation materials will be posted to the "Investor Relations" section of the Company's web site at www.he-equipment.com prior to the call. The presentation materials will be in Adobe Acrobat format. About H&E Equipment Services, Inc. The Company is one of the largest integrated equipment services companies in the United States with 67 full-service facilities throughout the West Coast, Intermountain, Southwest, Gulf Coast, Mid-Atlantic and Southeast regions of the United States. The Company is focused on heavy construction and industrial equipment and rents, sells and provides parts and service support for four core categories of specialized equipment: (1) hi-lift or aerial platform equipment; (2) cranes; (3) earthmoving equipment; and (4) industrial lift trucks. By providing equipment rental, sales, and on-site parts, repair and maintenance functions under one roof, the Company is a one-stop provider for its customers' varied equipment needs. This full service approach provides the Company with multiple points of customer contact, enabling it to maintain a high quality rental fleet, as well as an effective distribution channel for fleet disposal and provides cross-selling opportunities among its new and used equipment sales, rental, parts sales and service operations. Forward-Looking Statements Certain statements in this press release are "forward-looking statements" within the meaning of the federal securities laws. Statements about our beliefs and expectations and statements containing the words "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend" and similar expressions constitute forward-looking statements.Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results that differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following: (1) general economic conditions and construction activity in the markets where we operate in North America as well as the impact of the recent macroeconomic downturn and current conditions of the global credit markets and its effect on construction activity and the economy in general; (2) relationships with new equipment suppliers; (3) increased maintenance and repair costs as we age our fleet and decreases in our equipments' residual value; (4) our indebtedness; (5) the risks associated with the expansion of our business; (6) our possible inability to integrate any businesses we acquire; (7) competitive pressures; (8) compliance with laws and regulations, including those relating to environmental matters; and (9) other factors discussed in our public filings, including the risk factors included in the Company's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.Investors, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements after the date of this release.
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