EX-99.1 2 a05-17337_6ex99d1.htm EX-99.1

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

H&E Equipment Services Reports Third Quarter 2005 Results

 

BATON ROUGE, LA., November 7, 2005 - H&E Equipment Services L.L.C. (H&E), today announced that third quarter revenues increased $27.5 million, or 22.7%, from the third quarter of 2004, third quarter gross profit increased $13.4 million, or 40.1%, from the third quarter of 2004, third quarter net income increased $9.4 million and third quarter earnings before interest, taxes, depreciation and amortization (EBITDA) increased $12.2 million, or 54.7%.  John Engquist, President and Chief Executive Officer, said, “During the third quarter, we saw significant improvement in virtually all aspects of our business.  We continued to see positive results from our initiative to raise rental rates, which has increased our dollar utilization significantly.  Non-residential construction, the primary driver of our business, remained strong and created increased demand for our products and services.”

 

Results of Operations

 

Third quarter revenues were $148.5 million compared to $121.0 million for the third quarter of 2004.  Third quarter 2005 income from operations was $18.7 million compared to $8.9 million last year, an increase of $9.8 million.  The third quarter of 2005 net income was $8.2 million compared to a net loss of $1.2 million for the third quarter of 2004.  EBITDA for the third quarter increased $12.2 million, or 54.7%, to $34.5 million from $22.3 million for the third quarter of 2004.

 

Third quarter equipment rental revenues were $50.4 million compared to $42.1 million for the third quarter of 2004, reflecting an increase of $8.3 million, or 19.7%.  Increases occurred throughout the various product lines with the majority of the increase in aerial work platform equipment rental revenue.   At the end of the third quarter of 2005, the original acquisition cost of the rental fleet was $510.6 million, up $37.5 million from $473.1 million at the end of the third quarter of 2004.  For the third quarter of 2005, dollar utilization increased to 39.9% from 35.5% for the third quarter of 2004.

 

Third quarter new equipment sales were $36.2 million compared to $28.8 million for the third quarter of 2004, reflecting an increase of $7.4 million, or 25.7%.  Third quarter used equipment sales were $26.8 million, representing a $6.4 million, or 31.4%, increase from $20.4 million for the third quarter of 2004.  New equipment sales increased across all product lines.  Used equipment sales increased in aerial work platforms, earthmoving, lift trucks and other used equipment sales while used crane sales declined in comparison to the third quarter of 2004.  Parts sales and service revenues for the third quarter of 2005, collectively, were $27.4 million, representing a $4.0 million, or 17.1%, increase compared to $23.4 million for the third quarter of 2004.

 

Gross profit for the third quarter of 2005 was $46.8 million compared to $33.4 million for the third quarter of 2004, reflecting an increase of $13.4 million, or 40.1%.  Third quarter gross profit margin increased to 31.5% from 27.6% for the third quarter of 2004.  Gross profit margins improved for equipment rentals, new equipment sales, used equipment sales, parts sales and other revenues.

 

Third quarter gross profit from equipment rentals was $24.0 million compared to $17.4 million for the same time period last year, reflecting an increase of $6.6 million, or 37.9%. The increase was primarily a result of $8.3 million more in rental revenues offset by an increase in depreciation expense due to fleet growth.  New equipment sales gross profit for the third quarter of 2005 increased to $4.4 million from $3.2 million for the third quarter of 2004.  Used equipment sales gross profit for the third quarter of 2005 increased to $6.4 million from $4.2 million for the third quarter of 2004.  The improvement in both new and used equipment sales gross profit is a result of increased demand and improved residual values on used equipment.  Gross profit for parts sales and service revenues for the third quarter of 2005 was $11.4 million compared to $9.5 million for the same time period in 2004 and is primarily a result of higher revenues due to increased customer demand.

 

Selling, general and administrative expenses for the third quarter of 2005 were $28.2 million compared to $24.5 million last year, a $3.7 million, or 15.1%, increase.  The increase was primarily related to higher sales commissions, performance incentives, benefits, outside services and liability

 


 

insurance.  As a percentage of total revenues, selling, general and administrative expenses for the third quarter of this year decreased to 19.0% for the third quarter of this year from 20.2% for the third quarter of last year.

 

For the first nine months of 2005, revenues increased $68.1 million, or 19.6%, to $414.7 million from $346.6 million for the first nine months of 2004.  Income from operations for the first nine months of 2005 increased $30.0 million to $44.4 million from $14.4 million for the first nine months of 2004.  Net income was $13.5 million for the first nine months, up from a net loss of $15.4 million for the first nine months of 2004.  EBITDA for the first nine months of 2005 increased $33.8 million, or 62.5%, to $87.9 million from $54.1 million for the first nine months of 2004.

 

For the first nine months of 2005, equipment rental revenues were $136.6 million compared to $116.7 million last year, an increase of $19.9 million, or 17.1%.  New equipment sales for the first nine months of 2005 were $99.9 million compared to $80.6 million for the same period in 2004, an increase of $19.3 million, or 23.9%. Used equipment sales for the first nine months of 2005 were $76.3 million compared to $62.0 million for the first nine months of 2004, an increase of $14.3 million, or 23.1%.  Parts sales and service revenues for the first nine months of 2005 were $80.6 million compared to $69.7 million last year, an increase of $10.9 million, or 15.6% and are primarily due to increased customer demand.

 

For the first nine months of 2005, gross profit was $125.7 million compared to $87.1 million for the first nine months of 2004, an increase of $38.6 million, or 44.3%.  The current year total gross profit margin was 30.3% compared to 25.1% last year.  Gross profit margin improved for equipment rentals, new equipment sales, used equipment sales, parts sales, service revenues and other revenues.

 

For the first nine months of 2005, gross profit from equipment rentals was $62.2 million compared to $41.2 million for the same time period last year, an increase of $21.0 million, or 51.0%.  New equipment sales gross profit for the first nine months of this year increased $3.5 million, or 40.7%, to $12.1 million from $8.6 million for the first nine months of 2004.  Used equipment sales gross profit for the first nine months of this year increased $6.0 million, or 48.8%, to $18.3 million from $12.3 million for the first nine months of 2005.  Parts sales and service revenue gross profit for the first nine months of 2005 was $33.5 million compared to $28.4 million for the same time period in 2004.

 

Selling, general and administrative expenses for the first nine months of 2005 were $81.3 million compared to $72.9 million last year, a $8.4 million, or 11.5% increase.  The increase was primarily related to higher sales commissions, performance incentives, benefits, professional services and liability insurance.  As a percent of total revenues, selling, general and administrative expenses decreased to 19.6% for the first nine months of 2005 from 21.0% for the first nine months of 2004.

 

Non-GAAP Financial Measures

 

This press release contains a certain non-GAAP financial measure (EBITDA).  Please refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on November 7, 2005 for a description of our use of this measure.  EBITDA as calculated by us is not necessarily comparable to similarly titled measures reported by other companies.  Additionally, EBITDA is not a measure of financial performance or liquidity under GAAP and should not be considered an alternative to our other financial information determined under GAAP.

 

Conference Call

 

H&E’s management will hold its third quarter earnings conference call on November 9, 2005, at 11:00 AM Eastern Time.  The conference call number is 1.800.282.9233 and the participant code is 6422.  A replay of the call will be available approximately one hour following the call at 1.800.756.3819 and access code 142348.

 


 

About H&E Equipment Services L.L.C.

 

H&E Equipment Services L.L.C. is one of the largest integrated equipment rental, service and sales companies in the United States of America, with an integrated network of 41 facilities, all of which have full service capabilities, and a workforce that includes a highly-skilled group of service technicians and separate and distinct rental and equipment sales forces.  In addition to renting equipment, the Company also sells new and used equipment and provides extensive parts and service support.  This integrated model enables the Company to effectively manage key aspects of its rental fleet through reduced equipment acquisition costs, efficient maintenance and profitable disposition of rental equipment.  The Company generates a significant portion of its gross profit from parts sales and service revenues.

 

 

Forward-Looking Statements

 

Certain statements contained in this press release are forward-looking in nature.  These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “on track,” “plans,” “intends,” or “anticipates,” or the negative thereof or comparable terminology, or by discussions of strategy or outlook.  The Company’s business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may materially differ from those projected by any forward-looking statements.  Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) unfavorable economic and industry conditions can reduce demand and prices for the Company’s products and services, (2) governmental funding for highway and other construction projects may not reach expected levels, (3) the Company may not have access to the capital that it may require, (4) intense competition and (5) costs may increase more than anticipated.

 


 

H&E EQUIPMENT SERVICES L.L.C.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

Revenues:

 

 

 

 

 

 

 

 

 

Equipment rentals

 

$

50,409

 

$

42,076

 

$

136,576

 

$

116,722

 

New equipment sales

 

36,152

 

28,793

 

99,867

 

80,570

 

Used equipment sales

 

26,751

 

20,353

 

76,332

 

61,984

 

Parts sales

 

16,986

 

14,951

 

51,202

 

44,335

 

Service revenue

 

10,409

 

8,486

 

29,459

 

25,446

 

Other

 

7,749

 

6,315

 

21,300

 

17,564

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

148,456

 

120,974

 

414,736

 

346,621

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

Equipment rentals

 

24,040

 

17,353

 

62,158

 

41,214

 

New equipment sales

 

4,369

 

3,201

 

12,064

 

8,624

 

Used equipment sales

 

6,426

 

4,186

 

18,289

 

12,250

 

Parts sales

 

5,014

 

4,210

 

15,097

 

12,569

 

Service revenue

 

6,429

 

5,298

 

18,486

 

15,807

 

Other

 

520

 

(865

)

(400

)

(3,360

)

 

 

 

 

 

 

 

 

 

 

Total gross profit

 

46,798

 

33,383

 

125,694

 

87,104

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

28,219

 

24,489

 

81,342

 

72,878

 

Gain on sale of property and equipment

 

118

 

49

 

15

 

156

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

18,697

 

8,943

 

44,367

 

14,382

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(10,557

)

(10,161

)

(30,982

)

(29,836

)

Other income, net

 

85

 

11

 

255

 

95

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

8,225

 

(1,207

)

13,640

 

(15,359

)

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

—

 

—

 

171

 

—

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

8,225

 

$

(1,207

)

$

13,469

 

$

(15,359

)

 


 

H&E EQUIPMENT SERVICES L.L.C.

SELECTED BALANCE SHEET DATA

(in thousands)

 

 

 

September 30,
2005

 

December 31,
2004

 

 

 

 

 

 

 

Cash

 

$

4,440

 

$

3,358

 

Rental equipment, net

 

296,237

 

243,630

 

Total assets

 

494,956

 

408,669

 

 

 

 

 

 

 

Total debt (1)

 

323,955

 

298,665

 

Total liabilities

 

514,786

 

441,969

 

Members’ deficit

 

(19,830

)

(33,300

)

Total liabilities and members’ deficit

 

$

494,956

 

$

408,669

 

 

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

 

H&E EQUIPMENT SERVICES L.L.C.

UNAUDITED RECONCILIATION OF

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION and AMORTIZATION

(in thousands)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

8,225

 

$

(1,207

)

$

13,469

 

$

(15,359

)

Interest

 

10,557

 

10,161

 

30,982

 

29,836

 

Taxes

 

—

 

—

 

171

 

—

 

Depreciation and amortization

 

15,719

 

13,320

 

43,228

 

39,576

 

 

 

 

 

 

 

 

 

 

 

Earnings before interest, taxes, depreciation and amortization

 

$

34,501

 

$

22,274

 

$

87,850

 

$

54,053