H&E Equipment Services CEO John Engquist blames heavy rains and flooding across Louisiana and south Texas for the company’s weaker second quarter income, which was 35% lower than the net income it reported during the same period a year ago.
The Baton Rouge-based firm’s net income during the second quarter fell to $7.5 million, or $0.21 per diluted share, from a net income of $11.5 million, or $0.33 per diluted share, during the same quarter last year. The company’s second quarter earnings before interest, taxes, depreciation and amortization was $72.5 million, compared to $79.4 million for the same period a year ago.
“Unfortunately, the heavy rainfall and subsequent flooding in South Texas and Louisiana was a major headwind during the quarter, having a significant impact on the demand for earthmoving equipment,” Engquist says in a statement.
Revenue from equipment rentals was flat during the quarter, at roughly $108 million; while sales for new and used equipment fell. New equipment sales dropped 22.5% to $49.9 million, down from $64.6 million during the quarter last year. Used equipment sales fell 17.8% to $23.8 million, down from $28.9 million during the second quarter of 2015.
Overall revenues for the company during the second quarter fell 7.7%, from $262.4 million last year to $242.1 this year.
Engquist says H&E expected a slight decline in rental rates in the second quarter, adding that the company’s distribution business continues to be negatively impacted by weak crane demand due to weakness in the oil and gas markets. Still, his outlook remains positive.
“From a mid-year perspective, demand in our non-residential construction markets remains favorable across our entire footprint,” Engquist says. “Despite the significantly lower number of energy and chemical related project starts compared to last year, activity in our Gulf Coast industrial markets is positive with ongoing maintenance work on existing plants and new projects.”
See the complete second quarter report.
—Alexandria Burris
