H&E Equipment Slips To Loss In Q3

11/4/2009 3:16 PM ET

(RTTNews) - Wednesday, H&E Equipment Services, Inc. (HEES: News ), reported a swing to loss for the third quarter, primarily due to lack of adequate seasonal demand for its products and low rental pricing, which negatively impacted revenues across segments.

H&E Equipment reported a net loss for the quarter of $2.3 million or $0.07 per share, compared with a net income of $17.6 million, or $0.50 per share. On average, five analysts polled by Thomson Reuters expected the company to report a break even per share for the quarter. Analysts' estimates typically exclude special items.

The company's revenues decreased 37.0% to $175.6 million from $278.6 million in the comparable period year-ago. Four Street analysts estimated revenues of $176.83 million for the quarter.

Segment-wise, Equipment rental revenues decreased 42.3% to $45.1 million from $78.2 million in the third quarter of 2008. New equipment sales decreased 50.2% to $48.7 million from $97.8 million, and Used equipment sales decreased 17.9% to $32.7 million, from the year ago quarter. Parts sales declined 16.7% to $25.8 million, while Service revenues decreased 17.0% to $15.2 million from the third quarter a year-ago.

The company said during the quarter, it sold a substantial portion of its Yale lift truck assets including rental fleet, new and used equipment inventories and parts inventories for total cash proceeds of approximately $15.7 million. In connection with the transaction, it also recognized approximately $0.9 million in deferred service revenues from the termination of maintenance contracts.

H&E Equipment's total cost of revenues during the quarter declined to $135.66 million from $196.15 million and selling general and administrative expenses declined to $35.07 million from $45.55 million.

Gross margin for the quarter decline to 22.8% from 29.6% in the quarter ended September 30, 2008.

"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.

Year-to-date net income declined to $0.161 million from $43.93 million year-ago. Year-to-date earnings per share for the year-ago period was $1.22. The company's year-to-date revenues declined to $542.06 million from $807.05 million in the year earlier period.