Exhibit 99.1
Contacts:
Leslie S. Magee
Chief Financial Officer
225-298-5261
lmagee@he-equipment.com
Kevin S. Inda
Corporate Communications, Inc.
407-566-1180
kevin.Inda@cci-ir.com
H&E Equipment Services Reports Third Quarter 2009 Results
BATON ROUGE, Louisiana — (November 4, 2009) —H&E Equipment Services, Inc. (NASDAQ: HEES) today announced operating results for the third quarter ended September 30, 2009.
THIRD QUARTER 2009 SUMMARY
| | • | | Revenues decreased 37.0% to $175.6 million versus $278.6 million a year ago. |
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| | • | | EBITDA decreased 56.4% to $29.3 million, or a 16.7% margin, compared to $67.2 million, or a 24.1% margin, a year ago. |
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| | • | | Income from operations decreased 86.0% to $5.2 million compared to $37.2 million a year ago. |
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| | • | | Net loss was $2.3 million, or ($0.07) per diluted share, compared to net income of $17.6 million, or $0.50 per diluted share. |
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| | • | | Reduced debt by $42.0 million during the quarter. |
“Our business environment remains very challenging and we have not seen any seasonal increase in demand during the third quarter. While we are pleased to have experienced stabilization of our fleet utilization during the third quarter, we have not seen improvement in the structural economic problems that continue to impact the demand for our products and services. While utilization has stabilized, it has stabilized at a low level. As a result, rental pricing remains weak,” said John Engquist, H&E Equipment Services’ president and chief executive officer. “We have successfully reduced debt and increased liquidity during this prolonged recession. We continue to focus on our balance sheet, which positions our company to deal with the current weak environment and to take full advantage of the recovery when it begins.”
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H&E Equipment Services Reports Third Quarter 2009 Results
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November 4, 2009
“In spite of the severe decline in our markets and the earnings results based on contraction in our top-line revenues, we continued to make significant progress in fulfilling our balance sheet objectives. We reduced debt under our revolver by $42 million in the third quarter,” commented Leslie Magee, H&E Equipment Services’ chief financial officer. “Subsequently, we have fully repaid our revolver, leaving $312 million of borrowing availability on the credit facility and we expect to continue to generate cash throughout the fourth quarter. The demand for rental equipment and new and used equipment remains weak. In general, our customers lack a near-term need for construction equipment based on today’s limited visibility of a recovery in our end-markets. We have seen few signs of a boost in the confidence levels of our end-users, which is necessary to initiate increased capital spending by our customers. Consequently, we remain focused on asset management, debt reduction and cash generation. We ended the quarter with negative net rental cap-ex, further fleet reductions of $38.8 million and lower inventories.”
FINANCIAL DISCUSSION FOR THIRD QUARTER 2009
Our third quarter 2009 results of operations include the sale of a substantial portion of our Yale lift truck assets in the Intermountain region including rental fleet, new and used equipment inventories and parts inventories for total cash proceeds of approximately $15.7 million. At the time of the sale, these Yale lift trucks comprised approximately 3.5% of our total rental fleet assets and 71% of the total lift trucks in our rental fleet based on net book value. The sale of all related assets resulted in a gross profit margin of less than 5% in each asset category. Approximately 81% of the total sale proceeds were attributable to the sale of rental fleet assets. In connection with the transaction, we also recognized approximately $0.9 million in deferred service revenues from the termination of maintenance contracts associated with the Yale rental fleet assets sold.
Revenue
Total revenues decreased 37.0% to $175.6 million from $278.6 million in the third quarter of 2008. Equipment rental revenues decreased 42.3% to $45.1 million compared with $78.2 million in the third quarter of 2008. New equipment sales decreased 50.2% to $48.7 million from $97.8 million. Used equipment sales decreased 17.9% to $32.7 million compared to $39.9 million. Parts sales declined 16.7% to $25.8 million from $31.0 million in the third quarter of 2008. Service revenues decreased 17.0% to $15.2 million compared with $18.3 million in the third quarter of 2008. The sale of the Yale lift truck assets, included in the current period amounts above, had the effect of partially offsetting these revenue declines, particularly in used equipment sales.
Gross Profit
Gross profit decreased 51.6% to $40.0 million from $82.5 million in the third quarter of 2008. Gross margin was 22.8% for the quarter ended September 30, 2009 as compared to 29.6% for the quarter ended September 30, 2008. The lower gross margin in the current quarter is primarily due to lower rental gross margins and the sale of the Yale lift truck assets.
On a segment basis, gross margin on rentals decreased to 30.6% from 50.3% in the third quarter of 2008 due to declines in rental rates and lower time utilization combined with an increase in rental and depreciation expense as a percentage of revenues. On average, rental rates declined 19.1% as compared to the third quarter of 2008 and 3.4% as compared to the second quarter of 2009. Time utilization was 54.3% in the third quarter of 2009 as compared to 67.4% a year ago and 55.3% in the second quarter of 2009.
Gross margins on new equipment sales were 10.5%, which were down from 13.4% in comparison to the third quarter a year ago largely due to lower margins on new crane sales.
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H&E Equipment Services Reports Third Quarter 2009 Results
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Gross margins on used equipment sales decreased to 17.2% from 23.3% a year ago. Gross margins on used equipment sales were lower principally due to the sale of approximately $13.4 million of Yale used lift trucks. Gross margin on parts sales decreased to 26.5% from 29.5% last year due to the mix of parts sold, including the sale of approximately $1.1 million of Yale parts. Gross margin on service revenues decreased to 62.9% from 64.0% in the third quarter of 2008 due to revenue mix. The impact of mix on service gross margins was partially offset by the recognition of deferred service revenue associated with terminated maintenance contracts on the Yale rental fleet assets sold.
Rental Fleet
At the end of the third quarter of 2009, the original acquisition cost of the Company’s rental fleet was $694.1 million, down $112.2 million from $806.3 million at the end of the third quarter of 2008. Dollar utilization was 25.5% compared to 38.8% for the third quarter of 2008. Dollar returns decreased reflecting lower year-over-year average rental rates and lower time utilization as discussed above.
Selling, General and Administrative Expenses
SG&A expenses for the third quarter of 2009 were $35.1 million compared with $45.6 million last year, a $10.5 million, or 23.0% decrease. The decrease was primarily attributable to lower salaries and wages and other related employee expenses as a result of workforce reductions since the beginning of 2009 combined with lower incentive compensation that resulted from lower revenues. For the third quarter of 2009, SG&A expenses increased as a percentage of total revenues to 20.0% as compared with 16.3% last year.
Income from Operations
Income from operations for the third quarter of 2009 decreased 86.0% to $5.2 million, or an operating margin of 3.0%, compared with $37.2 million, or an operating margin of 13.3%, a year ago.
Interest Expense
Interest expense for the third quarter of 2009 decreased $1.7 million to $7.8 million from $9.5 million primarily due to a decrease in average borrowings on the Company’s senior secured credit facility and lower floor plan payables.
Net Income (Loss)
Net loss was $2.3 million, or ($0.07) per diluted share, compared to $17.6 million, or $0.50 per diluted share in the third quarter of 2008.
EBITDA
EBITDA for the third quarter of 2009 decreased $37.9 million to $29.3 million from $67.2 million in the third quarter of 2008. EBITDA as a percentage of revenues was 16.7% compared with 24.1% in the third quarter of 2008.
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.
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H&E Equipment Services Reports Third Quarter 2009 Results
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November 4, 2009
Conference Call
The Company’s management will hold a conference call to discuss third quarter results today, November 4, 2009, at 10:00 a.m. (Eastern Time). To listen to the call, participants should dial 913-312-1510 approximately 10 minutes prior to the start of the call. A telephonic replay will become available after 1:00 p.m. (Eastern Time) on November 4, 2009, and will continue to be available through November 12, 2009, by dialing 719-457-0820 and entering confirmation code 4542660.
The live broadcast of the Company’s quarterly conference call will be available online atwww.he-equipment.com orwww.earnings.com on November 4, 2009, 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 atwww.he-equipment.com prior to the call. The presentation materials will be in Adobe Acrobat format.
About H&E Equipment Services, Inc.
The Company is one of the largest integrated equipment services companies in the United States with 63 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 current 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 effectively 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. 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 Third Quarter 2009 Results
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H&E EQUIPMENT SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(Amounts in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | | |
| Equipment rentals | | $ | 45,108 | | | $ | 78,181 | | | $ | 150,669 | | | $ | 224,626 | |
| New equipment sales | | | 48,685 | | | | 97,797 | | | | 172,010 | | | | 274,135 | |
| Used equipment sales | | | 32,698 | | | | 39,873 | | | | 69,254 | | | | 128,436 | |
| Parts sales | | | 25,786 | | | | 30,951 | | | | 78,144 | | | | 89,112 | |
| Service revenues | | | 15,225 | | | | 18,333 | | | | 46,164 | | | | 52,651 | |
| Other | | | 8,126 | | | | 13,512 | | | | 25,824 | | | | 38,097 | |
| | | | | | | | | | | | | |
| Total revenues | | | 175,628 | | | | 278,647 | | | | 542,065 | | | | 807,057 | |
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| Cost of revenues: | | | | | | | | | | | | | | | | |
| Rental depreciation | | | 21,105 | | | | 26,362 | | | | 67,789 | | | | 78,838 | |
| Rental expense | | | 10,209 | | | | 12,514 | | | | 32,441 | | | | 36,460 | |
| New equipment sales | | | 43,549 | | | | 84,739 | | | | 150,519 | | | | 237,449 | |
| Used equipment sales | | | 27,069 | | | | 30,578 | | | | 56,482 | | | | 97,960 | |
| Parts sales | | | 18,952 | | | | 21,809 | | | | 56,339 | | | | 62,815 | |
| Service revenues | | | 5,646 | | | | 6,592 | | | | 17,059 | | | | 19,016 | |
| Other | | | 9,131 | | | | 13,556 | | | | 26,683 | | | | 38,735 | |
| | | | | | | | | | | | | |
| Total cost of revenues | | | 135,661 | | | | 196,150 | | | | 407,312 | | | | 571,273 | |
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| Gross profit | | | 39,967 | | | | 82,497 | | | | 134,753 | | | | 235,784 | |
| | | | | | | | | | | | | | | | | |
| Selling, general, and administrative expenses | | | 35,073 | | | | 45,556 | | | | 110,342 | | | | 138,097 | |
| Gain on sales of property and equipment | | | 289 | | | | 219 | | | | 472 | | | | 515 | |
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| Income from operations | | | 5,183 | | | | 37,160 | | | | 24,883 | | | | 98,202 | |
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| Interest expense | | | (7,847 | ) | | | (9,495 | ) | | | (24,039 | ) | | | (29,193 | ) |
| Other income, net | | | 123 | | | | 250 | | | | 518 | | | 731 | |
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| | | | | | | | | | | | | | | | | |
| Income (loss) before provision (benefit) for income taxes | | | (2,541 | ) | | | 27,915 | | | | 1,362 | | | | 69,740 | |
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| Provision (benefit) for income taxes | | | (261 | ) | | | 10,311 | | | | 1,201 | | | | 25,809 | |
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| Net income (loss) | | $ | (2,280 | ) | | $ | 17,604 | | | $ | 161 | | | $ | 43,931 | |
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| NET INCOME (LOSS) PER SHARE | | | | | | | | | | | | | | | | |
| Basic — Net income (loss) per share | | $ | (0.07 | ) | | $ | 0.50 | | | $ | — | | | $ | 1.22 | |
| | | | | | | | | | | | | |
| Basic — Weighted average number of common shares outstanding | | | 34,625 | | | | 35,075 | | | | 34,601 | | | | 35,912 | |
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| Diluted — Net income (loss) per share | | $ | (0.07 | ) | | $ | 0.50 | | | $ | — | | | $ | 1.22 | |
| | | | | | | | | | | | | |
| Diluted — Weighted average number of common shares outstanding | | | 34,625 | | | | 35,090 | | | | 34,638 | | | | 35,918 | |
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H&E Equipment Services Reports Third Quarter 2009 Results
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November 4, 2009
H&E EQUIPMENT SERVICES, INC.
SELECTED BALANCE SHEET DATA (unaudited)
(Amounts in thousands)
| | | | | | | | | |
| | | September 30, | | December 31, |
| | | 2009 | | 2008 |
| |
| Cash | | $ | 8,699 | | | $ | 11,266 | |
| Rental equipment, net | | | 460,459 | | | | 554,457 | |
| Total assets | | | 789,955 | | | | 966,634 | |
| | | | | | | | | |
Total debt (1) | | | 257,168 | | | | 330,584 | |
| Total liabilities | | | 499,049 | | | | 676,427 | |
| Stockholders’ equity | | | 290,906 | | | | 290,207 | |
| Total liabilities and stockholders’ equity | | $ | 789,955 | | | $ | 966,634 | |
| | |
| (1) | | Total debt consists of the aggregate amounts outstanding on the senior secured credit facility, senior unsecured notes, capital lease obligation and notes payable obligations. |
H&E EQUIPMENT SERVICES, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | (2,280 | ) | | $ | 17,604 | | | $ | 161 | | | $ | 43,931 | |
| Interest expense | | | 7,847 | | | | 9,495 | | | | 24,039 | | | | 29,193 | |
| Provision (benefit) for income taxes | | | (261 | ) | | | 10,311 | | | | 1,201 | | | | 25,809 | |
| Depreciation | | | 23,804 | | | | 29,153 | | | | 76,039 | | | | 87,167 | |
| Amortization of intangibles | | | 148 | | | | 641 | | | | 444 | | | | 2,108 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| EBITDA | | $ | 29,258 | | | $ | 67,204 | | | $ | 101,884 | | | $ | 188,208 | |
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