Baton Rouge-based heavy equipment services firm H&E Equipment says the oil and gas drilling slump paired with poor weather for construction projects caused the company’s second quarter revenue and profit to fall.
Total revenue decreased by 6.4% between the start of April and end of June to $262.4 million, down from $280.4 million in the second quarter last year. Gross profit decreased 3% to $86.4 million in the second quarter, down from $89.1 million during the three month span last year.
“The extreme rainfall and subsequent flooding that occurred in May throughout the central United States had a significant impact on our operations as construction activity slowed significantly for nearly a month in many of our regions,” says H&E ECO John Engquist in a prepared statement released this morning. “Despite this unanticipated challenge and ongoing softness in the oil patch, rental revenues increased nearly 10% from a year ago.”
While rental revenues increased on the quarter, the report shows new equipment sales decreased 28.9% to $64.4 million, while used equipment sales decreased 7.9% to $28.9 million and service revenues decreased 2.1% to $15.8 million. Despite those declines, Engquist says H&E believes its business outlook remains positive due to the expected strength in the commercial construction markets.
“Most market indicators remain positive and we believe the recovery in the commercial construction markets will continue to accelerate throughout the remainder of this year and into 2016,” he says. “Activity in June picked up significantly and this momentum is continuing into July. Increased commercial construction activity in other markets continues to offset the demand declines related to oil and gas. Overall, we are pleased with the trends in our rental business and overall momentum in the commercial construction markets as we head into the second half of this year.”
H&E says it expects 2015 revenue in the range of $1.03 billion to $1.052 billion. On Business Report’s new 2015 listing of the state’s largest 20 public companies, ranked by 2014 revenue, H&E is No. 9, up one spot from the year previous on revenue growth of 10.4% to $1.09 billion.
See more details about H&E’s latest quarterly report.
—Steve Sanoski
