H&E Equipment Services Inc. Reports Operating Results (10-Q)
H&E Equipment Services Inc. is one of the largest integrated equipment services companies in the United States with full-service facilities throughout the Intermountain Southwest Gulf Coast & Southeast regions of the United States. The Company is focused on heavy construction & industrial equipment and rents sells & provides parts & service support for four core categories of specialized equipment they are hi-lift or aerial platform equipment cranes earthmoving equipment & industrial lift trucks. By providing equipment rental sales & on-site parts repair & 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 & provides cross-selling opportunities among its new & used equipment sales rental parts sale H&E Equipment Services Inc. has a market cap of $380.9 million; its shares were traded at around $10.98 with a P/E ratio of 7.7 and P/S ratio of 0.4. Highlight of Business Operations: Equipment Rental Revenues. Our revenues from equipment rentals for the three months ended June 30, 2009 decreased approximately $25.1 million, or 33.4%, to approximately $50.1 million from $75.2 million for the same three month period in 2008. Rental revenues decreased for all four core product lines. Revenues from aerial work platforms decreased $16.6 million, cranes decreased $1.8 million, earthmoving equipment decreased $3.7 million, lift trucks decreased $1.5 million and other equipment rentals decreased $1.5 million. These decreases were due to lower demand resulting from the factors discussed above, which negatively impacted our rental rates. Our average rental rates for the three month period ended June 30, 2009 declined 15.8% compared to the same three month period last year and declined 7.4% on a sequential basis from the three month period ended March 31, 2009.
New Equipment Sales Revenues. Our new equipment sales for the three months ended June 30, 2009 decreased $40.7 million, or 40.7%, to $59.3 million from $100.0 million for the comparable period in 2008. Sales of new equipment decreased for all four core product lines. Sales of new cranes decreased $20.1 million, while sales of new aerial work platforms decreased $3.9 million, sales of
Used Equipment Sales Revenues. Our used equipment sales decreased $26.7 million, or 56.6%, to $20.5 million for the three months ended June 30, 2009, from approximately $47.2 million for the same period in 2008, primarily as a result of lower demand for used equipment. Sales of used cranes decreased $10.3 million while sales of used aerial work platform equipment, used earthmoving equipment and used lift trucks decreased $9.6 million, $4.1 million and $2.2 million, respectively. Sales of other used equipment decreased $0.5 in the comparable three month periods.
Equipment Rentals Gross Profit. Our gross profit from equipment rentals for the three months ended June 30, 2009 decreased $20.8 million, or 56.1%, to approximately $16.3 million from $37.1 million in the same period in 2008. The decrease in equipment rentals gross profit is the net result of a $25.1 million decrease in rental revenues, which was partially offset by a $1.2 million net decrease in rental expenses and a $3.1 million decrease in rental equipment depreciation expense. The net decrease in rental expenses and rental equipment depreciation expense was primarily due to a smaller fleet size in 2009 compared to 2008. As a percentage of equipment rental revenues, maintenance and repair costs were 15.4% in 2009 compared to 12.4% in 2008 and depreciation expense was 45.7% in 2009 compared to 34.6% in 2008. These percentage increases are primarily attributable to the decline in comparative rental revenues.
New Equipment Sales Gross Profit. Our new equipment sales gross profit for the three months ended June 30, 2009 decreased $5.2 million, or 40.6%, to $7.6 million compared to $12.8 million for the same period in 2008 on a total new equipment sales decline of $40.7 million. Gross profit margin on new equipment sales for the three months ended June 30, 2009 and 2008 was 12.8% in both periods.
Used Equipment Sales Gross Profit. Our used equipment sales gross profit for the three months ended June 30, 2009 decreased $7.0 million, or 65.0%, to $3.7 million from $10.7 million for the same period in 2008 on a used equipment sales decrease of $26.7 million. Gross profit margin for the three months ended June 30, 2009 was 18.3%, down 4.4% from 22.7% in the same period last year, as
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