Baton Rouge-based H&E Equipment Services’ rental business continued to be strong in the third quarter, but slow sales of new equipment is being blamed for a 3.3% slide in net income to $14.8 million, down from $15.3 million during the three-month period last year.
“While our business continues to perform well overall, we continue to have limited visibility into our distribution business. Our new equipment sales remain soft, primarily as a result of low demand for cranes,” says H&E CEO John Engquist in the third quarter report, released today. “We do not expect the normal ramp-up in crane sales during the fourth quarter as we have experienced in previous years.”
Overall revenues for the company during the third quarter rose by 0.7% to $276.9 million, up from $275 million last year. Rental revenues were particularly strong, up 9.1%, or $9.9 million, to $118.1 million. But it wasn’t enough to offset a 17.6% decrease in new equipment sales to $66.6 million, down from $80.8 million last year. Sales of used equipment rose 15.5% to $29.1 million. Parts sales were flat at $29 million, while service revenues increased 7.1% to $16.7 million.
The net income slide for the third quarter works out to 42 cents per share, down from 43 cents on the quarter last year. H&E is revising its 2015 revenue estimate downward to somewhere in the range of $1.028 billion to $1.037 billion. The company had previously forecast revenue of $1.07 billion to $1.09 billion this year.
“We believe our business outlook remains positive due to the expected strength in the commercial construction markets,” says Engquist. “Due to the continued softness in the oil and gas markets and weak near-term demand in new cranes sales combined with the lack of visibility, we are adjusting our annual guidance announced last quarter.”
See the complete third quarter report.
—Steve Sanoski
