06.08.2013

H&E revenues jump/profits flat

Louisiana based H&E Equipment has posted a strong increase in first half revenues, while profits remain flat.

Total revenues for the crane, access and general equipment sales and rental company were $457.7 million for the first six months, almost 20 percent higher than last year, with improvements across the board. Pre-tax profits though only increased by 2.5 percent to $22.98 million.

Looking at the second quarter on its own, revenues were $245.3 million, 17.5 percent higher than in the same quarter last year, while pre-tax profits clipped four percent to $16 million.

On average, rental rates increased 7.3 percent compared to the second quarter of 2012, while physical utilisation slipped from 73.5 percent last year to 71 percent, this year thanks to a larger fleet. The profit stagnation/fall was driven entirely by significantly higher interest costs. Margins at the operating level generally improved throughout the business.

Chief executive John Engquist said: “The strength and momentum in our business continued in the second quarter and was driven by solid improvement in rentals and equipment sales compared to a year ago. Total revenues increased 17.4%, primarily as a result of an 18.8% increase in rental revenues and a 22.4% increase in our combined new and used equipment sales, which remain strong in terms of both demand and margin contribution. As a result, EBITDA increased 22.3% from a year ago. End user demand continues to build and activity regarding earthmoving equipment and cranes is strong, demonstrating improved economic confidence and cycle expansion.”

“We believe our concentration and penetration in the industrial sector, particularly the oil patch and petrochemical business along the Gulf Coast, continue to be a major benefit for our business. Rising oil prices and demand for natural gas are spurring capital investment. In Louisiana, where we are headquartered, reports indicate we are in the beginning stages of one of the largest industrial expansions of our state’s history. We are also excited about the industrial expansion in markets we serve in Texas. Our less industrial focused regions continue to strengthen as well. Our outlook for the balance of 2013 remains positive.”

Vertikal Comment

All in all this is a very positive result from H&E which continues to benefit from the improving market and its acquisition of JW Burress just before the recession hit in late 2007. There is still considerable upside to the business which is well placed to benefit as the global economy continues to pick up.