UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 08/04/2011
H&E Equipment Services, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-51759
| Delaware (State or other jurisdiction of incorporation) |
81-0553291 (IRS Employer Identification No.) |
11100 Mead Road, Suite 200
Baton Rouge, LA 70816
(Address of principal executive offices, including zip code)
Baton Rouge, LA 70816
(Address of principal executive offices, including zip code)
(225) 298-5200
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On August 4, 2011, we issued a press release announcing our financial results for the
three months ended June 30, 2011. A copy of the press release is attached as Exhibit 99.1.
The information in this Form 8-K and the attached exhibit shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated by reference into
any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set
forth by specific reference in such filing.
Item 8.01. Other Events
We define EBITDA as net income (loss) before interest expense, income taxes, depreciation
and amortization. We use EBITDA in our business operations to, among other things, evaluate the
performance of our business, develop budgets and measure our performance against those budgets. We
also believe that analysts and investors use EBITDA as a supplemental measure to evaluate a
company’s overall operating performance. However, EBITDA has material limitations as an analytical
tool and you should not consider EBITDA in isolation, or as a substitute for analysis of our
results as reported under GAAP. We consider EBITDA a useful tool to assist us in evaluating
performance because it eliminates items related to capital structure, taxes and non-cash charges.
The items that we have eliminated in determining EBITDA for the periods presented are interest
expense, income taxes, depreciation of fixed assets (which includes rental equipment and property
and equipment), and amortization of intangible assets. However, some of these eliminated items are
significant to our business. For example, (i) interest expense is a necessary element of our costs
and ability to generate revenue because we incur a significant amount of interest expense related
to our outstanding indebtedness; (ii) payment of income taxes is a necessary element of our costs;
and (iii) depreciation is a necessary element of our costs and ability to generate revenue because
rental equipment is the single largest component of our total assets and we recognize a significant
amount of depreciation expense over the estimated useful life of this equipment. Any measure that
eliminates components of our capital structure and costs associated with carrying significant
amounts of fixed assets on our consolidated balance sheet has material limitations as a performance
measure. In light of the foregoing limitations, we do not rely solely on EBITDA as a performance
measure and also consider our GAAP results. EBITDA is not a measurement of our financial
performance under GAAP and should not be considered as an alternative to net income (loss),
operating income (loss) or any other measures derived in accordance with GAAP. Because EBITDA is
not calculated in the same manner by all companies, it may not be comparable to other similarly
titled measures used by other companies.
Item 9.01. Financial Statements and Exhibits
| 99.1 | Press Release, dated August 4, 2011, announcing financial results for the three
months ended June 30, 2011. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| H&E Equipment Services, Inc. |
||||
| Date: August 4, 2011 | By: | /s/ Leslie S. Magee | ||
| Chief Financial Officer | ||||
Exhibit 99.1
News Release
Contacts:
Leslie S. Magee
Chief Financial Officer
225-298-5261
lmagee@he-equipment.com
Kevin S. Inda
Corporate Communications, Inc. (CCI)
407-566-1180
kevin.inda@cci-ir.com
H&E Equipment Services Reports Second Quarter 2011 Results
BATON ROUGE, Louisiana — (August 4, 2011) — H&E Equipment Services, Inc. (NASDAQ: HEES)
today announced results for the second quarter ended June 30, 2011.
SECOND QUARTER 2011 HIGHLIGHTS:
| • | Revenues increased 40.7% to $184.3 million versus $131.0 million a year ago. Growth was achieved in all operating segments. |
| • | Net income increased to $2.7 million in the second quarter compared to a net loss of $7.1 million a year ago. |
| • | EBITDA increased 89.1% to $35.2 million from $18.6 million, yielding a margin of 19.1% compared to 14.2% of revenues a year ago. |
| • | New equipment sales increased 100.0% from a year ago driven by increased crane and earthmoving sales. |
| • | Rental revenues increased 33.8%, or $14.1 million to $55.8 million on higher time utilization, better rates, and a larger fleet compared to a year ago. |
| • | Gross margins were 25.9% as compared to 24.7% a year ago. Rental gross margins increased to 40.7% compared to 31.1% a year ago. |
| • | Average time utilization (based on units available for rent) increased to 67.1% compared to 54.9% last year and 61.0% last quarter. Average time utilization (based on original equipment cost) increased to 70.0% compared to 57.9% a year ago and 64.9% in the first quarter of 2011. |
| • | Achieved positive year-over-year and sequential rental pricing in the quarter. Average rental rates increased 6.4% compared to a year ago and improved 4.2% from the first quarter of this year. |
| • | Dollar utilization was 31.0% as compared to 25.3% a year ago. |
| • | Average rental fleet age at June 30, 2011 was 43 months, down slightly from the end of the last quarter and significantly younger than the industry average age of 53 months. |
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H&E
Equipment Services Reports Second Quarter 2011 Results
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August 4, 2011
“With 41% revenue growth on a year-over-year basis and 37% on a sequential basis, the current
trends in our business are particularly encouraging despite a commercial construction environment
that remains relatively dormant,” said John Engquist, H&E Equipment Services’ president and chief
executive officer. “The momentum in our rental business continued as revenue climbed 33.8%, gross
profit increased 75.3%, and gross margins grew to 40.7% compared to 31.1% a year ago. We were
pleased with the progress that we made on rental rates during the quarter. Rental rates increased
6.4% from a year ago and 4.2% from the first quarter. Our new equipment sales were particularly
strong in the second quarter as strong demand for cranes and earthmoving machines resulted in a
100.0%, or $29.0 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%, EBITDA grew 89.1% 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,” Engquist commented. “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.”
FINANCIAL DISCUSSION FOR SECOND QUARTER 2011:
Revenue
Total revenues increased 40.7% to $184.3 million from $131.0 million in the second quarter of 2010.
Equipment rental revenues increased 33.8% to $55.8 million compared with $41.7 million in the
second quarter of 2010. New equipment sales increased 100.0% to $57.9 million from $29.0 million
in the second quarter of 2010. Used equipment sales increased 28.6% to $23.1 million compared to
$17.9 million in the second quarter of 2010. Parts sales increased 9.5% to $24.9 million from
$22.8 million in the second quarter of 2010. Service revenues increased 5.4% to $13.2 million
compared to $12.6 million a year ago.
Gross Profit
Gross profit increased 47.6% to $47.8 million from $32.4 million in the second quarter of 2010.
Gross margin was 25.9% for the quarter ended June 30, 2011, compared to gross margin of 24.7% for
the quarter ended June 30, 2010.
On a segment basis, second quarter of 2011 gross margin on rentals was 40.7% compared to 31.1% in
the second quarter of 2010 due to higher average rental rates on new contracts in the period and
improved fleet utilization. On average, rental rates increased 6.4% as compared to the second
quarter of 2010. Time utilization (based on units) was 67.1% in the second quarter of 2011 and
54.9% a year ago.
Gross margin on new equipment sales was 11.7% as compared to 9.9% in the second quarter a year ago
driven primarily by improved crane margins. Gross margin on used equipment sales was 21.7%
compared to 22.7% a year ago which was lower due to the mix of used equipment sold. Gross margin
on parts sales increased to 26.8% from 26.1%. Gross margin on service revenues decreased to 61.2%
from 66.2% in the prior year due primarily to revenue mix.
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H&E
Equipment Services Reports Second Quarter 2011 Results
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August 4, 2011
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August 4, 2011
Rental Fleet
At the end of the second quarter of 2011, the original acquisition cost of the Company’s rental
fleet was $724.9 million, an increase of $67.2 million from $657.7 million at the end of the second
quarter of 2010 and an increase of $39.8 million from $685.1 million at the end of 2010. Dollar
utilization was 31.0% compared to 25.3% for the second quarter of 2010. Dollar returns increased
reflecting higher year-over-year average rental rates and improved time utilization.
Selling, General and Administrative Expenses
SG&A expenses for the second quarter of 2011 were $37.5 million compared with $36.8 million last
year, a $0.7 million, or 2.1%, increase. For the second quarter of 2011, SG&A expenses as a
percentage of total revenues were 20.4% as compared to 28.1% a year ago.
Income (Loss) from Operations
Income from operations for the second quarter of 2011 was $10.3 million, or 5.6% of revenues,
compared with loss from operations of $4.3 million, or 3.2% of revenues, a year ago.
Interest Expense
Interest expense for the second quarter of 2011 and 2010 was $7.2 million in each period.
Net Income (Loss)
Net income was $2.7 million, or $0.08 per diluted share, compared to net loss of $7.1 million, or
($0.20) per diluted share, a year ago. The effective income tax rate was 18.7% compared to 37.5% a
year ago.
EBITDA
EBITDA for the second quarter of 2011 increased 89.1% to $35.2 million compared to $18.6 million a
year ago. EBITDA, as a percentage of revenues, was 19.1% compared to 14.2% a year ago.
Non-GAAP Financial Measures
This press release contains certain Non-GAAP measures (EBITDA). Please refer to our Current Report
on Form 8-K for a description of our use of these measures. EBITDA, as calculated by the Company,
is not necessarily comparable to similarly titled measures reported by other companies.
Additionally, these Non-GAAP measures are not measurements 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 second quarter results today,
August 4, 2011, at 10:00 a.m. (Eastern Time). To listen to the call, participants should dial
719-325-2190 approximately 10 minutes prior to the start of the call. A telephonic replay will be
available after 1:00 p.m. (Eastern Time) on August 4, 2011, and will continue through August 13,
2011, by dialing 719-457-0820 and entering confirmation code 3639996.
The live broadcast of the Company’s quarterly conference call will be available online at
www.he-equipment.com or www.earnings.com on August 4, 2011, beginning at 10:00 a.m. (Eastern Time)
and will continue to be available for 30 days. Related presentation materials will be posted to
the “Investor Relations” section of the Company’s web site at www.he-equipment.com prior to the
call. The presentation materials will be in Adobe Acrobat format.
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H&E
Equipment Services Reports Second Quarter 2011 Results
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August 4, 2011
About H&E Equipment Services, Inc.
The Company is one of the largest integrated equipment services companies in the United States with
65 full-service facilities throughout the West Coast, Intermountain, Southwest, Gulf Coast,
Mid-Atlantic and Southeast regions of the United States. The Company is focused on heavy
construction and industrial equipment and rents, sells and provides parts and service support for
four core categories of specialized equipment: (1) hi-lift or aerial platform equipment; (2)
cranes; (3) earthmoving equipment; and (4) industrial lift trucks. By providing equipment rental,
sales, and on-site parts, repair and maintenance functions under one roof, the Company is a
one-stop provider for its customers’ varied equipment needs. This full service approach provides
the Company with multiple points of customer contact, enabling it to maintain a high quality rental
fleet, as well as an effective distribution channel for fleet disposal and provides cross-selling
opportunities among its new and used equipment sales, rental, parts sales and service operations.
Forward-Looking Statements
Certain statements in this press release are “forward-looking statements” within the meaning of the
federal securities laws. Statements about our beliefs and expectations and statements containing
the words “may”, “could”, “would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”,
“target”, “project”, “intend” and similar expressions constitute forward-looking statements.
Forward-looking statements involve known and unknown risks and uncertainties, which could cause
actual results that differ materially from those contained in any forward-looking statement. Such
factors include, but are not limited to, the following: (1) general economic conditions and
construction activity in the markets where we operate in North America as well as the impact of the
recent macroeconomic downturn and current conditions of the global credit markets and its effect on
construction activity and the economy in general; (2) relationships with new equipment suppliers;
(3) increased maintenance and repair costs as we age our fleet and decreases in our equipments’
residual value; (4) our indebtedness; (5) the risks associated with the expansion of our business;
(6) our possible inability to integrate any businesses we acquire; (7) competitive pressures; (8)
compliance with laws and regulations, including those relating to environmental matters; and (9)
other factors discussed in our public filings, including the risk factors included in the Company’s
most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Investors, potential
investors and other readers are urged to consider these factors carefully in evaluating the
forward-looking statements and are cautioned not to place undue reliance on such forward-looking
statements. Except as required by applicable law, including the securities laws of the United
States and the rules and regulations of the SEC, we are under no obligation to publicly update or
revise any forward-looking statements after the date of this release.
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H&E
Equipment Services Reports Second Quarter 2011 Results
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August 4, 2011
H&E EQUIPMENT SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(Amounts in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(Amounts in thousands, except per share amounts)
| Three
Months Ended June 30, |
Six
Months Ended June 30, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Equipment rentals |
$ | 55,772 | $ | 41,675 | $ | 104,250 | $ | 78,128 | ||||||||
New equipment sales |
57,913 | 28,962 | 87,086 | 56,255 | ||||||||||||
Used equipment sales |
23,066 | 17,931 | 38,483 | 31,362 | ||||||||||||
Parts sales |
24,942 | 22,782 | 46,519 | 42,414 | ||||||||||||
Service revenues |
13,244 | 12,571 | 25,881 | 24,054 | ||||||||||||
Other |
9,398 | 7,085 | 17,024 | 13,479 | ||||||||||||
Total revenues |
184,335 | 131,006 | 319,243 | 245,692 | ||||||||||||
Cost of revenues: |
||||||||||||||||
Rental depreciation |
21,507 | 19,353 | 42,070 | 38,632 | ||||||||||||
Rental expense |
11,569 | 9,372 | 22,308 | 18,619 | ||||||||||||
New equipment sales |
51,118 | 26,103 | 77,148 | 51,013 | ||||||||||||
Used equipment sales |
18,058 | 13,862 | 29,620 | 24,607 | ||||||||||||
Parts sales |
18,261 | 16,847 | 34,101 | 31,094 | ||||||||||||
Service revenues |
5,137 | 4,252 | 10,048 | 8,628 | ||||||||||||
Other |
10,890 | 8,838 | 21,037 | 16,835 | ||||||||||||
Total cost of revenues |
136,540 | 98,627 | 236,332 | 189,428 | ||||||||||||
Gross profit |
47,795 | 32,379 | 82,911 | 56,264 | ||||||||||||
Selling, general, and
administrative expenses |
37,546 | 36,765 | 75,639 | 72,639 |
Gain on sales of property and
equipment |
52 | 135 | 149 | 199 | ||||||||||||
Income (loss) from operations |
10,301 | (4,251 | ) | 7,421 | (16,176 | ) | ||||||||||
Interest expense |
(7,178 | ) | (7,203 | ) | (14,385 | ) | (14,494 | ) | ||||||||
Other income, net |
185 | 106 | 508 | 156 | ||||||||||||
Income (loss) before provision (benefit)
for income taxes |
3,308 | (11,348 | ) | (6,456 | ) | (30,514 | ) | |||||||||
Provision (benefit) for income taxes |
619 | (4,255 | ) | (2,672 | ) | (11,343 | ) | |||||||||
Net income (loss) |
$ | 2,689 | $ | (7,093 | ) | $ | (3,784 | ) | $ | (19,171 | ) | |||||
NET INCOME (LOSS) PER SHARE
Basic — Net income (loss) per share |
$ | 0.08 | $ | (0.20 | ) | $ | (0.11 | ) | $ | (0.55 | ) | |||||
Basic — Weighted average number of
common shares outstanding |
34,725 | 34,642 | 34,713 | 34,634 | ||||||||||||
Diluted — Net income (loss) per share |
$ | 0.08 | $ | (0.20 | ) | $ | (0.11 | ) | $ | (0.55 | ) | |||||
Diluted — Weighted average number of
common shares outstanding |
34,906 | 34,642 | 34,713 | 34,634 | ||||||||||||
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H&E
Equipment Services Reports Second Quarter 2011 results
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August 4, 2011
H&E EQUIPMENT SERVICES, INC.
SELECTED BALANCE SHEET DATA (unaudited)
(Amounts in thousands)
SELECTED BALANCE SHEET DATA (unaudited)
(Amounts in thousands)
| June
30, 2011 |
December
31, 2010 |
|||||||
Cash |
$ | 5,686 | $ | 29,149 | ||||
Rental equipment, net |
445,502 | 426,637 | ||||||
Total assets |
731,384 | 734,421 | ||||||
Total debt (1) |
267,905 | 252,754 | ||||||
Total liabilities |
480,719 | 480,171 | ||||||
Stockholders’ equity |
250,665 | 254,250 | ||||||
Total liabilities and stockholders’ equity |
$ | 731,384 | $ | 734,421 | ||||
| (1) | Total debt consists of the aggregate amounts outstanding on the senior secured credit facility, senior unsecured notes and capital lease obligations. |
H&E EQUIPMENT SERVICES, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands)
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income (loss) |
$ | 2,689 | $ | (7,093 | ) | $ | (3,784 | ) | $ | (19,171 | ) | |||||
Interest expense |
7,178 | 7,203 | 14,385 | 14,494 | ||||||||||||
Provision (benefit) for income taxes |
619 | (4,255 | ) | (2,672 | ) | (11,343 | ) | |||||||||
Depreciation |
24,622 | 22,628 | 48,317 | 45,339 | ||||||||||||
Amortization of intangibles |
123 | 147 | 247 | 295 | ||||||||||||
EBITDA |
$ | 35,231 | $ | 18,630 | $ | 56,493 | $ | 29,614 | ||||||||