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FIRST QUARTER 2021 SUMMARY
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Revenues decreased 2.6% to
$278.4 million versus$285.9 million a year ago. -
Net income was
$4.2 million compared to a net loss of$(37.0) million a year ago. Included in the first quarter 2020 net loss was a$62.0 million pre-tax non-cash goodwill impairment charge. Excluding the impairment charge, net income was$10.8 million a year ago. The effective income tax rate was 27.1% in the first quarter of 2021 and 21.9% in the first quarter of 2020. Excluding the impairment charge, the effective income tax rate was 26.2% a year ago. -
Adjusted EBITDA decreased 16.2% to
$83.2 million in the first quarter of 2021 compared to$99.2 million a year ago, yielding a margin of 29.9% of revenues compared to 34.7% a year ago. -
Total equipment rental revenues for the first quarter of 2021 were
$156.2 million , a decrease of$18.3 million , or 10.5%, compared to$174.5 million a year ago. Rental revenues for the first quarter of 2021 were$139.9 million , a decrease of approximately$18.7 million , or 11.8%, compared to$158.6 million in the first quarter of 2020. -
New equipment sales increased 22.3% to
$37.7 million in the first quarter of 2021 compared to$30.9 million a year ago. -
Used equipment sales increased 33.8% to
$41.8 million in the first quarter of 2021 compared to$31.2 million a year ago. - Gross margin was 33.4% compared to 36.9% a year ago. The decrease in gross margin was largely the result of lower rental gross margins and revenue mix.
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Total equipment rental gross margins were 37.4% in the first quarter of 2021 compared to 41.3% a year ago. Rental gross margins were 42.1% in the first quarter of 2021 compared to 46.1% last year. The decrease was primarily due to lower rates and time utilization. Margins in the first quarter of 2021 were also negatively impacted due to lower revenues associated with an additional billing day in the prior year quarter on
February 29, 2020 . -
Average time utilization (based on original equipment cost) was 63.5% compared to 64.3% a year ago. The size of the Company’s rental fleet based on original acquisition cost decreased 8.4% from a year ago, to
$1.8 billion . - Average rental rates decreased 4.0% compared to a year ago and declined 0.2% sequentially.
- Dollar utilization was 32.0% in the first quarter of 2021 compared to 33.1% a year ago.
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Average rental fleet age at
March 31, 2021 , was 41.5 months compared to an industry average age of 52.5 months. -
Opened two new branches in the first quarter of 2021:
Lodi, CA (Stockton andCentral Valley area) andConcord, NC (North Charlotte area). -
Paid regular quarterly cash dividend of
$0.275 per share of common stock. -
Accrued expense of
$1.0 million for litigation loss contingency in SG&A.
Barber continued, “Additionally, used equipment prices have improved, which indicates to us a healthy balance in equipment within the markets we serve. Forward-looking industry indicators like the ABI and DMI have also shown solid improvement in recent months. We believe our exposure to a very wide range of project types in the non-residential construction markets as well as our expansive service footprint in high-growth geographies positions us very well to benefit from these improving trends.”
Barber added, “Our financial results for the quarter were impacted by the historic winter storm in February, which significantly disrupted the on-rent momentum we had been building. Approximately 40% of our locations were closed for nearly a week and several areas within our footprint were without power and water for weeks. The forward momentum in our business has since resumed. Total revenues in the first quarter were only down 2.6%, or
Barber concluded, “We remain extremely focused on executing our growth strategy. During the first quarter we opened two new branches and thus far in the second quarter, five new locations began serving customers. With seven new locations opened year-to-date, I am very pleased with the progress we have made toward our stated goal of eight-to-ten new branches in 2021. We also continue to explore opportunities to deploy capital for acquisitions in the general rental and specialty segments that will further expand our geographic scale and product offerings.”
FINANCIAL DISCUSSION FOR FIRST QUARTER 2021:
Revenue
Total revenues decreased 2.6% to
Gross Profit
Gross profit decreased 11.8% to
Rental Fleet
At the end of the first quarter of 2021, the original acquisition cost of the Company’s rental fleet was
Selling, General and Administrative Expenses
SG&A expenses for the first quarter of 2021 were
Income (Loss) from Operations
Income from operations for the first quarter of 2021 was
Interest Expense
Interest expense was
Net Income (Loss)
Net income was
Adjusted EBITDA
Adjusted EBITDA for the first quarter of 2021 decreased 16.2% to
Non-GAAP Financial Measures
This press release contains certain Non-GAAP measures (EBITDA, Adjusted EBITDA, Adjusted Income from Operations, Adjusted Net Income, Adjusted Net Income per share and the disaggregation of equipment rental revenues and cost of sales numbers) detailed below. Please refer to our Current Report on Form 8-K for a description of these measures and of our use of these measures. These measures as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these Non-GAAP measures are not a measurement 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 first quarter 2021 results today,
The live broadcast of
About
The Company is one of the largest integrated equipment services companies in
Forward-Looking Statements
Statements contained in this press release that are not historical facts, including statements about H&E’s beliefs and expectations, are “forward-looking statements” within the meaning of the federal securities laws. Statements containing the words “may”, “could”, “would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”, “target”, “project”, “intend”, “foresee” 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) risks related to the impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, material delays and cancellations of construction or infrastructure projects, supply chain disruptions and other impacts to the business; (2) general economic conditions and construction and industrial activity in the markets where we operate in
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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
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(Amounts in thousands, except per share amounts) |
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Three Months Ended
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2021 |
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2020 |
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Revenues: |
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Equipment rentals |
$ |
156,224 |
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$ |
174,519 |
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New equipment sales |
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37,745 |
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30,873 |
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Used equipment sales |
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41,766 |
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31,218 |
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Parts sales |
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25,612 |
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29,769 |
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Service revenues |
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14,510 |
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16,822 |
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Other |
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2,588 |
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2,721 |
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Total revenues |
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278,445 |
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285,922 |
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Cost of revenues: |
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Equipment rentals |
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Rental depreciation |
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55,349 |
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59,986 |
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Rental expense |
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25,688 |
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25,569 |
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Rental other |
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16,723 |
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16,805 |
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97,760 |
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102,360 |
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New equipment sales |
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33,442 |
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27,426 |
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Used equipment sales |
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28,365 |
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20,438 |
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Parts sales |
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18,747 |
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21,903 |
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Service revenues |
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4,697 |
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5,540 |
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Other |
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2,431 |
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2,772 |
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Total cost of revenues |
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185,442 |
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180,439 |
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Gross Profit |
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93,003 |
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105,483 |
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Selling, general, and administrative expenses |
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73,953 |
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79,624 |
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Merger and other |
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737 |
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40 |
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Gain on sales of property and equipment, net |
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(154) |
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(4,264) |
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Impairment of goodwill |
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- |
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61,994 |
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Income (Loss) from Operations |
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18,467 |
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(31,911) |
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Interest expense |
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(13,443) |
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(16,030) |
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Other income, net |
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667 |
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630 |
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Income before provision (benefit) for income taxes |
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5,691 |
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(47,311) |
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Provision (benefit) for income taxes |
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1,540 |
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(10,343) |
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Net Income (Loss) |
$ |
4,151 |
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$ |
(36,968) |
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NET INCOME (LOSS) PER SHARE: |
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Basic – Net income (loss) per share |
$ |
0.11 |
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$ |
(1.03) |
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Basic – Weighted average number of common shares outstanding |
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36,185 |
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35,965 |
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Diluted – Net income (loss) per share |
$ |
0.11 |
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$ |
(1.03) |
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Diluted – Weighted average number of common shares outstanding |
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36,387 |
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35,965 |
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Dividends declared per common share |
$ |
0.275 |
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$ |
0.275 |
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SELECTED BALANCE SHEET DATA (unaudited) |
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(Amounts in thousands) |
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2021 |
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2020 |
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Cash |
$ |
322,545 |
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$ |
310,882 |
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Rental equipment, net |
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1,019,462 |
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1,028,745 |
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Total assets |
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2,054,483 |
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1,980,484 |
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Total debt (1) |
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1,250,242 |
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1,250,305 |
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Total liabilities |
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1,820,787 |
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1,742,251 |
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Stockholders’ equity |
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233,696 |
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238,233 |
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Total liabilities and stockholders’ equity |
$ |
2,054,483 |
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$ |
1,980,484 |
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(1) Total debt consists of the aggregate amounts outstanding on the senior unsecured notes and finance lease obligations. |
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UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
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(Amounts in thousands, except per share amounts) |
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Three Months Ended |
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2020 |
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2020 |
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As Reported |
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Adjustments |
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As Adjusted |
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Gross profit |
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$ |
105,483 |
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– |
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$ |
105,483 |
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Selling, general and administrative expenses |
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79,624 |
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– |
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79,624 |
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Impairment of goodwill |
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61,994 |
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(61,994 |
) |
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– |
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Gain on sale of property and equipment, net |
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4,264 |
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– |
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4,264 |
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Merger and other |
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40 |
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– |
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40 |
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Income (loss) from operations |
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(31,911 |
) |
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61,994 |
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30,083 |
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Interest expense |
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(16,030 |
) |
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– |
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(16,030 |
) |
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Other income, net |
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630 |
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– |
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630 |
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Income (loss) before provision (benefit) for income taxes |
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(47,311 |
) |
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61,994 |
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14,683 |
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Provision (benefit) for income taxes |
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(10,343 |
) |
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14,196 |
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3,853 |
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Net income (loss) |
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$ |
(36,968 |
) |
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$ |
47,798 |
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$ |
10,830 |
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Three Months Ended |
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2020 |
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2020 |
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As Reported |
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Adjustments |
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As Adjusted |
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NET INCOME (LOSS) PER SHARE(1) |
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Basic – Net income (loss) per share |
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$ |
(1.03 |
) |
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$ |
1.33 |
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$ |
0.30 |
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Basic – Weighted average number of common shares outstanding |
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35,965 |
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35,965 |
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35,965 |
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Diluted – Net income (loss) per share |
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$ |
(1.03 |
) |
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$ |
1.32 |
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$ |
0.30 |
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Diluted – Weighted average number of common shares outstanding |
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35,965 |
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36,082 |
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36,082 |
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(1) Because of the method used in calculating per share data, the summation of the above per share data may not necessarily total to the as adjusted per share data. |
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UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
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(Amounts in thousands) |
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Three Months Ended
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2021 |
2020 |
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Net Income (loss) |
$ |
4,151 |
$ |
(36,968 |
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Interest Expense |
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13,443 |
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16,030 |
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Provision (benefit) for income taxes |
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1,540 |
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(10,343 |
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Depreciation |
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62,294 |
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67,424 |
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Amortization of intangibles |
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993 |
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1,010 |
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EBITDA |
$ |
82,421 |
$ |
37,153 |
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Merger and other |
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737 |
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40 |
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Impairment of goodwill |
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- |
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61,994 |
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Adjusted EBITDA |
$ |
83,158 |
$ |
99,187 |
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UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
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(Amounts in thousands) |
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Three Months Ended
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2021 |
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2020 |
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RENTAL REVENUES |
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Equipment rentals(1) |
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$ |
139,941 |
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$ |
158,618 |
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Rentals other |
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16,283 |
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15,901 |
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Total equipment rentals |
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156,224 |
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174,519 |
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RENTAL COST OF SALES |
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Rental depreciation |
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55,349 |
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59,986 |
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Rental expense |
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25,688 |
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25,569 |
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Rental other |
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16,723 |
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16,805 |
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Total rental cost of sales |
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97,760 |
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102,360 |
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RENTAL REVENUES GROSS PROFIT (LOSS) |
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Equipment rentals |
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58,904 |
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|
73,063 |
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Rentals other |
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(440) |
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(904) |
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Total rental revenues gross profit |
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$ |
58,464 |
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$ |
72,159 |
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RENTAL REVENUES GROSS MARGIN |
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Equipment rentals |
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42.1% |
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46.1% |
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Rentals other |
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-2.7% |
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-5.7% |
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Total rental revenues gross margin |
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37.4% |
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41.3% |
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(1) Pursuant to SEC Regulation S-X, our equipment rental revenues are aggregated and presented in our unaudited consolidated statements of operations in this press release as a single line item, “Equipment Rentals”. The above table disaggregates our equipment rental revenues for discussion and analysis purposes only. |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20210427005082/en/
Chief Financial Officer
225-298-5261
lmagee@he-equipment.com
Vice President of Investor Relations
225-298-5318
kinda@he-equipment.com
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