H&e Equipment Services Inc. has a market cap of $351.6 million; its shares were traded at around $10.44 with and P/S ratio of 0.5. HEES is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management.
Highlight of Business Operations: Our largest expenses are the costs to purchase the new equipment we sell, the costs associated with the used equipment we sell, rental expenses, rental depreciation and costs associated with parts sales and services, all of which are included in cost of revenues. For the nine month period ended September 30, 2010, our total cost of revenues was approximately $305.4 million. Our operating expenses consist principally of selling, general and administrative expenses. For the nine month period ended September 30, 2010, our selling, general and administrative expenses were approximately $109.2 million. In addition, we have interest expense related to our debt instruments. We are also subject to federal and state income taxes. Operating expenses and all other income and expense items below the gross profit line of our condensed consolidated statements of operations are not generally allocated to our reportable segments.
A significant portion of our overall value is in our rental fleet equipment. The net book value of rental equipment at September 30, 2010 was $412.1 million, or approximately 55.7% of our total assets. Our rental fleet, as of September 30, 2010, consisted of approximately 15,823 units having an original acquisition cost (which we define as the cost originally paid to manufacturers or the original amount financed under operating leases) of approximately $665.5 million. As of September 30, 2010, our rental fleet composition was as follows (dollars in millions):
On average, we increased the overall average age of our rental fleet equipment by approximately 3.0 months for the nine month period ended September 30, 2010. The original acquisition cost of our overall gross rental fleet decreased by approximately $9.7 million, or approximately 1.4%, for the nine month period ended September 30, 2010, mostly due to a planned elimination of rental fleet growth capital expenditures and selective fleet replacement expenditures during the first half of the year in response to a challenging economic environment and credit market conditions. In response to improved equipment time utilization during the third quarter of 2010, we grew our rental fleet equipment size from 15,554 units with an original acquisition cost of $657.7 million at June 30, 2010 to 15,823 units with an original acquisition cost of $665.5 million at September 30, 2010. On average, the overall average age of our rental fleet decreased by approximately 0.2 months for the three month period ended September 30, 2010.
Total Revenues. Our total revenues were $153.8 million for the three month period ended September 30, 2010 compared to $175.6 million for the same three month period in 2009, a decrease of $21.8 million, or 12.4%. Included in total revenues for the three months ended September 30, 2009 were revenues of $16.6 million from the Arnold Transaction. Revenues for all reportable segments and non-segmented revenues are further discussed below.
Equipment Rental Revenues. Our revenues from equipment rentals for the three month period ended September 30, 2010 increased $3.2 million, or 7.0%, to $48.3 million from $45.1 million in the same three month period in 2009. Rental revenues from earthmoving equipment increased $3.9 million while rental revenues from aerial work platforms and other equipment increased $1.1 million and $0.2 million, respectively. These increases were offset by decreases in crane and lift truck rental revenues of $1.2 million and $0.8 million, respectively. Our average rental rates for the three month period ended September 30, 2010 declined 5.9% compared to the same three month period in 2009.
New Equipment Sales Revenues. Our new equipment sales for the three month period ended September 30, 2010 decreased $1.0 million, or 2.0%, to $47.7 million from $48.7 million for the comparable period in 2009. The Arnold Transaction accounted for $1.2 million of new lift truck equipment sales revenues for the three month period ended September 30, 2009. Sales of new cranes decreased $9.2 million, reflecting lower demand due to the macroeconomic downturn and the other factors discussed above. Sales of new lift trucks decreased $1.2 million largely as a result of the Arnold Transaction. Sales of new earthmoving equipment increased $4.6 million, while sales of aerial work platforms increased $4.2 million and sales of other equipment i
Read the The complete Report