05.08.2011

H&E up 30%

US based crane and access sales and rental company H&E Equipment, has reported 30 percent higher revenues for the first half as it moves back into profit.

Total revenues for the first six months of 2011 were $319.2 million just over 30 percent higher than for the same period last year. Revenues increased in all sectors, with crane and equipment sales more than double what they were last year. The company posted a pre-tax loss for the half year of $6.5 million compared to a loss in the first half of 2010 of $30.5 million.

The second quarter saw revenues rise by 40.7 percent to $184.3 million, which helped lift the business back into the black, with a pre-tax profit of $3.3 million, compared to a loss last year of $11.3 million. The rental business rebounded strongly with rates improving 6.4 percent year on year and up 4.2 percent on the first quarter. At the same time physical utilisation improved to 67 percent from 55 percent this time last year and from 61 percent in the first quarter.

Chief executive John Engquist said: "With 41 percent revenue growth on a year-over-year basis and 37 percent on a sequential basis, the current trends in our business are particularly encouraging despite a commercial construction environment that remains relatively dormant. The momentum in our rental business continued as revenue climbed 33.8 percent, gross profit increased 75.3 percent and gross margins grew to 40.7 percent compared to 31.1 percent a year ago.”

“Our new equipment sales were particularly strong in the second quarter as strong demand for cranes and earthmoving machines resulted in a 100 percent, or $29 million, revenue increase from a year ago. As a result of significant revenue growth in all of our operating segments, gross profit increased 47.6 percent, EBITDA by 89.1 percent and we achieved bottom line profitability with EPS improving $0.28 from a year ago."

"Due to the timing of certain crane and earthmoving deliveries, we expected the second quarter to potentially be our strongest sales period of the year. While we expect continued sequential and year over year improvement in our rental business through the third quarter, we are more cautious and have less visibility on the distribution side of our business."

Vertikal Comment
An encouraging set of results in spite of the caveats that this might be the best sales quarter of the year. The fact that buyers are investing in new and used cranes again is a good sign for the future, no matter how fragile the pick-up is.

The news on rates is also a good indicator that sense is returning to the sector quickly which transforms rental operations, something which is essential given the rising prices we are likely to see for new equipment in the second half.

Another positive report amongst the constant gloom from the financial markets, where panic and fear seems to be the only reaction - regardless of how significant the news they are reacting to.

The fact is in the real world life goes on and companies are getting on with business with the new cycle beginning to kick in.