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Crane Hot Line

JLG's Third-Quarter Performance Proves Impressive; H&E Equipment Services Reports Q1 Gains on All Fronts

May 25, 2005 — For the fiscal third quarter (ending May 1, 2005), JLG Industries, McConnellsburg, Pa., announced that its consolidated revenues reached $505 million — a 59% boost from last year's $319 million total during the same period.


In terms of net income, the company reported $22.7 million, or $0.47 per diluted share, which is more than double the $8.7 million ($0.20 per diluted share) achieved the prior year. Adjusted to exclude the impact of integration expenses and expenses associated with the early extinguishment of debt, earnings for Q3 were $0.56 per diluted share. This is a 133% increase, versus $0.24 per diluted share in the prior year. Cash flow from operations was $101 million for the quarter compared to a use of $25 million cash last year during the same period.


"International sales grew 75% year-over-year and domestic sales increased by 54%,” said Bill Lasky, chairman of the board, president, and CEO. “Our operating profit margin improvement reflects the full impact of pricing actions taken earlier in the year, the benefits of the OmniQuip synergies, Six Sigma initiatives, and ongoing productivity improvements. The order board has more than doubled sequentially to $665 million with delivery dates extending well into our 2006 fiscal year."


For the first nine months of fiscal 2005, consolidated revenues were $1.17 billion — a 52% increase from the prior year period of $769 million. Reflecting the high price of raw materials partly offset by price increases, operating income was $60.5 million for the current year-to-date period and $44.0 million for the prior year period. On a year-to-date basis, cash flow from operations was $88 million compared to a use of $45 million cash in the prior year period.


"We were extremely pleased by the success of our equity offering during the quarter," said Jim Woodward, executive vice president and CFO. "We used the proceeds to repurchase a portion of our Senior Subordinated Notes and Senior Notes. These transactions, combined with our other business activities including $101 million in cash flow from operations, resulted in a quarter-end cash and marketable securities position of $172 million and a reduction in net debt-to-net debt plus shareholders' equity ratio from 50% to 12% sequentially."


Economic activity, particularly in commercial and non-residential construction, was the primary drivers of equipment demand, noted Woodward. “Fleet age, rental, and utilization rates for our type of equipment continues to drive demand in most all geographic regions and product lines," he said. "Rental companies are continuing their strong pace of equipment refreshment propelled by some of the highest utilization rates they have seen since the last cycle peak in 2000. If historical patterns hold true, in the near- to mid-term, we should be moving from a strong cyclical recovery into an expansion phase as improving economic conditions in our principal markets and higher construction spending continue to drive demand. We also expect the continuing improvement of component availability to help drive operating efficiency gains.”


In light of this outlook, Woodward said the company expects full year revenue growth of 40% to 45% versus its previously stated guidance of 30% to 35%

 

In other financial news, H&E Equipment Services L.L.C., Baton Rouge, La., recently released its first quarter financials. Q1 revenues increased $16.6 million (14.8%) from the first quarter of 2004. Gross profit increased $12 million (48.4%) compared to the same quarter last year. Net income increased by the largest percentage (111.5%), or $10 million, while Q1 earnings before interest, taxes, depreciation, and amortization (EBITDA) increased $10.4 million, or 74.0%.

 

"Our strong performance in the first quarter reflects significant improvement in revenue and gross profit in each of our business segments,” says John Engquist, president and chief executive officer. “With continued improvement in non-residential construction, the primary driver of our business, and our belief that we will continue to see rental rates improve throughout the remainder of the year, 2005 should be a very strong year for our company."


Q1 equipment rental revenues were $40.6 million compared to $35.6 million for the first quarter of 2004, reflecting an increase of $5 million, or 14%. The overall increase was primarily due to a $4.5 million increase in aerial work platform equipment rental revenue. At the end of the first quarter of 2005, the original acquisition cost of the rental fleet was $459.8 million, down $13.6 million from $473.4 million at the end of the first quarter of 2004. For the first quarter of 2005, dollar utilization increased to 35.1% from 29.6% for the first quarter of 2004.


New equipment sales were $30.3 million compared to $25.3 million for the same quarter of last year, reflecting an increase of $5.0 million, or 19.8%. First quarter used equipment sales were $25.6 million, representing a $2.3 million, or 9.9%, increase from $23.3 million for the first quarter of 2004. New equipment sales increased in aerial work platforms, earthmoving, lift trucks, and other new equipment while new crane sales decreased. Used equipment sales increased in cranes, aerial work platforms, and earthmoving while lift trucks and other used equipment sales declined in comparison to the first quarter of 2004.


As previously announced, the company delayed reporting its final 2004 results. We will also delay finalizing results for the first quarter of 2005 and filing Form 10-Q until final results for 2004 are reported.




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