H&E Equipment Services Inc. (HEES), a heavy construction and industrial equipments provider, Wednesday said its second-quarter profit plunged from the year ago quarter, primarily hurt by a continuing decline in product demand resulting in a revenue decline. Lower gross margin also impacted quarterly results.
Rouge, Louisiana-based H&E Equipment Services' quarterly net income plummeted to $0.3 million or $0.01 per share from $16.1 million or $0.45 per share in the comparable quarter last year, below Street's estimates.
On average, three analysts polled by Thomson Reuters expected second-quarter earnings of $0.13 per share. Analysts' estimates typically exclude special items such as one-time charges or gains.
Quarterly revenues dropped 36.2% to $180.2 million from $282.6 million in same quarter last year, below analysts' estimate of $215.19 million, primarily due to a decline in used equipment sales.
Used equipment sales for the quarter decreased 56.5% from the same quarter a year ago, while equipment rental revenues declined 33.4%. New equipment sales dropped 40.7%, while parts sales were down 10.0% from the same quarter last year. service revenues for the second quarter also dropped 12.7% from the comparable year ago quarter.
Income from operations for the second quarter dropped 75.3% to $8.6 million from $34.9 million in the corresponding quarter last year as gross margin declined from the year-ago quarter.
Gross margin for the second quarter dropped to 24.7% from 28.5% in the same quarter a year ago, hurt by a decline in rental gross margin. Rental gross margin for the quarter decreased to 32.5% from 49.3% in the similar quarter last year.
The company also recorded an increase in effective income tax rate for the second quarter of 65.1%, compared to 37.0% in the second quarter last year, due to the effect of permanent differences on lower pre-tax income.
John Engquist, president and chief executive officer, H&E Equipment Services, said "The recession continues to heavily impact our non-residential construction and industrial end-markets."
For the period of six months, net income plunged to $2.441 million or $0.07 per share from $26.327 million or $0.72 per share in the same quarter last year.
Revenues for the period dropped to $366.437 million from $528.410 million in the same quarter last year.
HEES is currently trading at $10.06, down $0.93 or 8.47%, on a volume of 0.145 million shares on the Nasdaq.
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