H&E Reports Strong Second-Quarter Results | Construction News

H&E Equipment Services has reported strong financial results for the second quarter of 2014, with many important categories rising by double-digit percentages over the same period in 2013.

H&E CEO John Engquist, said that the company continued to capitalize on the improving trends in non-residential construction, especially the escalating activity in the energy and chemical sectors along the Gulf Coast. “The momentum in our rental business continued, as strong physical utilization combined with fleet investment and increased rates drove higher revenues and solid margin improvement,” said Engquist. “Our distribution business also continued to perform well, with new equipment sales increasing more than 20% and our combined parts and service business increasing more than 10%.”

In his remarks, Engquist noted that the outlook for the rest of the year also look good. “Our outlook remains positive for the balance of this year, based on the current trends in our business and high demand in our end-user markets. With continued targeted investment in our fleet as well as pinpointed greenfield and organic expansion, we are extremely focused on delivering equipment where demand dictates and taking advantage of growth opportunities in the marketplace,” he said.

Here are the highlights of H&E’s report:

  • Revenues increased 14.3% to $280.4 million versus $245.3 million a year ago.
  • Net income increased 45.5% to $15.7 million in the second quarter compared to net income of $10.8 million a year ago.
  • EBITDA increased 24.3% to $78.7 million from $63.3 million, yielding a margin of 28.1% of revenues compared to 25.8% of revenues a year ago.
  • Rental revenues increased 18.0%, or $15.1 million, to $98.8 million due to strong physical utilization while continuing to expand the fleet based on high demand. Better rates also contributed to higher rental gross margins compared to a year ago.
  • Combined parts and service revenues increased 10.6% to $44.5 million this quarter compared to $40.2 million a year ago on improved gross margins in both business segments. Combined parts and service gross margins yielded a 42.0% return compared to 39.6% a year ago.
  • Gross margins were 31.8% versus 30.7% a year ago.
  • Average time utilization (based on original equipment cost) was 72.7% compared to 71.0% a year ago and 69.2% in the first quarter of 2014. Average time utilization (based on units available for rent) was 67.0% compared to 66.3% last year and 64.5% last quarter.
  • Achieved positive year-over-year and sequential rental pricing in the second quarter. Average rental rates increased 2.1% compared to a year ago and improved 1.8% from the first quarter of this year.
  • Dollar utilization was 36.3% as compared to 35.8% a year ago.
  • Average rental fleet age at June 30, 2014 was 32.3 months, down from 34.4 months at the end of the last quarter and younger than the industry average age of 47 months.