BATON ROUGE, La.--(BUSINESS WIRE)--Aug. 2, 2012-- H&E Equipment Services, Inc. (NASDAQ: HEES) today announced results for the second quarter ended June 30, 2012.

SECOND QUARTER 2012 HIGHLIGHTS:

• Revenues increased 13.4% to $209.0 million versus $184.3 million a year ago.
• Net income increased to $10.5 million in the second quarter compared to net income of $2.7 million a year ago.
• EBITDA increased 46.8% to $51.7 million from $35.2 million, yielding a margin of 24.7% compared to 19.1% of revenues a year ago.
• Rental revenues increased 26.4%, or $14.7 million to $70.5 million on higher time utilization, better rates, and a larger fleet compared to a year ago.
• Gross margins were 30.7% as compared to 25.9% a year ago. Rental gross margins increased to 47.5% compared to 40.7% a year ago.
• Average time utilization (based on units available for rent) increased to 68.7% compared to 67.1% last year and 65.8% last quarter. Average time utilization (based on original equipment cost) increased to 73.5% compared to 70.0% a year ago and 69.5% in the first quarter of 2012.
• Achieved positive year-over-year and sequential rental pricing in the second quarter. Average rental rates increased 11.0% compared to a year ago and improved 5.0% from the first quarter of this year.
• Dollar utilization was 35.6% as compared to 31.0% a year ago.
• Average rental fleet age at June 30, 2012 was 40.4 months, down slightly from the end of the last quarter and significantly younger than the industry average age of 50 months.

John Engquist, H&E Equipment Services’ president and chief executive officer, said, “Our second quarter performance was very strong as we continued to experience solid demand in all of our end user markets, particularly in our Gulf Coast markets where energy-related activity remains very healthy. A modest recovery in commercial construction activity is also driving higher demand for rentals as the fundamentals for this segment of our business are very strong. We are approaching our prior record levels of time utilization and our strong dollar returns allow us to continue to increase our fleet size, which as of June 30^th, has surpassed our prior peak levels. Based on the strong demand and improved rental pricing, we plan to further expand our fleet through the remainder of this year. Rental rates improved 11.0% from a year ago and 5.0% from the first quarter. New equipment sales remain difficult to predict, but bidding activity for hydraulic cranes used in the energy sector is encouraging.”

“Our second quarter performance was again solid, and we are especially pleased with our bottom line improvement. While the overall economic environment is hard to predict, the trends in the markets we serve remain positive and the momentum in our business is continuing. We are opening two new locations in Texas to expand our presence and we continue to evaluate expansion opportunities in other markets as well.”

FINANCIAL DISCUSSION FOR SECOND QUARTER 2012:

Revenue

Total revenues increased 13.4% to $209.0 million from $184.3 million in the second quarter of 2011. Equipment rental revenues increased 26.4% to $70.5 million compared with $55.8 million in the second quarter of 2011. New equipment sales increased 11.7% to $64.7 million from $57.9 million in the second quarter of 2011. Used equipment sales increased 2.3% to $23.6 million compared to $23.1 million in the second quarter of 2011. Parts sales decreased 0.9% to $24.7 million from $24.9 million in the second quarter of 2011. Service revenues increased 4.8% to $13.9 million compared to $13.2 million a year ago.

Gross Profit

Gross profit increased 34.4% to $64.2 million from $47.8 million in the second quarter of 2011. Gross margin was 30.7% for the quarter ended June 30, 2012, compared to gross margin of 25.9% for the quarter ended June 30, 2011.

On a segment basis, gross margin on rentals in the second quarter of 2012 was 47.5% compared to 40.7% in the second quarter of 2011 due to higher average rental rates on new contracts in the period and improved fleet utilization. On average, rental rates increased 11.0% as compared to the second quarter of 2011. Time utilization (based on OEC) was 73.5% in the second quarter of 2012 compared to 70.0% a year ago.

Gross margin on new equipment sales was 10.9% as compared to 11.7% in the second quarter a year ago. Gross margin on used equipment sales was 30.5% compared to 21.7% a year ago, due to the mix of used equipment sold and improved pricing. Gross margin on parts sales increased to 28.0% from 26.8%. Gross margin on service revenues increased to 62.8% from 61.2% in the prior year due primarily to revenue mix.

Rental Fleet

At the end of the second quarter of 2012, the original acquisition cost of the Company’s rental fleet was $809.3 million, an increase of $84.4 million from $724.9 million at the end of the second quarter of 2011 and an increase of $72.7 million from $736.6 million at the end of 2011. Dollar utilization was 35.6% compared to 31.0% for the second quarter of 2011. Dollar returns increased reflecting higher year-over-year average rental rates and improved time utilization.

Selling, General and Administrative Expenses

SG&A expenses for the second quarter of 2012 were $41.4 million compared with $37.5 million last year, a $3.9 million, or 10.3%, increase. For the second quarter of 2012, SG&A expenses as a percentage of total revenues were 19.8% as compared to 20.4% a year ago.

Income from Operations

Income from operations for the second quarter of 2012 was $23.5 million, or 11.2% of revenues, compared with income from operations of $10.4 million, or 5.6% of revenues, a year ago.

Interest Expense

Interest expense for the second quarter of 2012 was $7.0 million compared to $7.2 million a year ago.

Net Income

Net income was $10.5 million, or $0.30 per diluted share, in the second quarter of 2012, compared to net income of $2.7 million, or $0.08 per diluted share, a year ago. The effective income tax rate in the second quarter of 2012 was 37.2% compared to 18.7% a year ago.

EBITDA

EBITDA for the second quarter of 2012 increased 46.8% to $51.7 million compared to $35.2 million a year ago. EBITDA, as a percentage of revenues, was 24.7% compared to 19.1% 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 second quarter results today, August 2, 2012, at 10:00 a.m. (Eastern Time). To listen to the call, participants should dial 719-325-2431 approximately 10 minutes prior to the start of the call. A telephonic replay will be available after 1:00 p.m. (Eastern Time) on August 2, 2012, and will continue to be available through August 14, 2012, by dialing 719-457-0820 and entering confirmation code 2442687.

The live broadcast of the Company’s quarterly conference call will be available online at www.he-equipment.com or www.earnings.com on August 2, 2012, 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 64 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 that are not historical facts, including statements about our beliefs and expectations are forward-looking statements. 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 to 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 and industrial activity in the markets where we operate in North America as well as the depth and duration of the macroeconomic downturn related to decreases in construction and industrial activities, and the impact of conditions of the global credit markets and their effect on construction spending activity and the economy in general; (2) relationships with 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 effectively integrate any businesses we acquire; (7) competitive pressures; (8) compliance with laws and regulations, including those relating to environmental matters and corporate governance 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.

⁽¹⁾ Total debt consists of the aggregate amounts outstanding on the senior secured credit facility, senior unsecured notes and capital lease obligations.

Source: H&E Equipment Services, Inc.

H&E Equipment Services, Inc.
Leslie S. Magee, 225-298-5261
Chief Financial Officer
lmagee@he-equipment.com
or
Corporate Communications, Inc. (CCI)
Kevin S. Inda, 407-566-1180
kevin.inda@cci-ir.com