H&E Equipment Services last week posted total third-quarter revenue of $153.8 million, a 12-percent dip compared with $175.6 million for the same period last year. Gross profit was $37.9 million, compared with $40.0 million a year ago. Operating income was $1.5 million, compared with $5.2 million for the same period last year. Net loss was $3.8 million, or ($0.11) per diluted share, compared to a net loss of $2.3 million, or ($0.07) per diluted share, a year ago. EBITDA for the third quarter was $24.5 million, compared to $29.3 million, a year ago.
Although revenue dropped on a year-over-year basis, it did improve sequentially from the second quarter. “Market conditions continued to improve during the third quarter and as a result, areas of our business delivered solid sequential gains,” said John Engquist, H&E Equipment Services’ president and CEO. “Total revenue increased 17.4 percent sequentially from the second quarter, driven by continued growth in our rental business and increased new equipment sales. Due to improving rental demand, we increased both our overall rental capacity and the physical utilization of our fleet. We were also very pleased to achieve sequential rental rate improvement of 1.8 percent. As a result, rental revenue increased 15.8 percent from the second quarter and 7 percent from a year ago. Our third-quarter results also reflected significant increases in rental gross profit and margins on both a sequential and on a year-over-year basis.”
New equipment sales increased 64.7 percent from the second quarter and were near year-ago levels. Rental gross margins increased to 37.5 percent in the third quarter reflecting a significant improvement on both a year-over-year and on a sequential basis.
Average time utilization (based on units available for rent) increased to 62.3 percent, compared to 54.9 percent in the second quarter and 54.3 percent a year ago. Average time utilization (based on original equipment cost) increased to 65.9 percent, compared to 57.9 percent in the second quarter and 57.1 percent a year ago.
Dollar utilization was 29.2 percent in the third quarter, an increase of approximately 400 basis points on both a year-over-year and on a sequential basis.
“All of these factors indicate our environment is improving and we are positioned to take advantage of continuing improvements in our end markets,” Engquist said. “In October, our rental business performed at levels we have not experienced since early in 2009, at which time we were maintaining $100 million more in rental assets. However, while we are very encouraged by the current activity, we remain cautious regarding the balance of this year due to potential seasonality issues and ongoing economic challenges in several of our markets. We hope to see continued improvement throughout 2011.”
Rental fleet age at Sept. 30 was 43.0 months compared to an industry average near 52 months.
In the quarter, new equipment sales decreased 2.1% percent to $47.7 million from $48.7 million in the third quarter of 2009. Used equipment sales decreased 55.0 percent to $14.7 million compared to $32.7 million in the third quarter of 2009. Parts sales decreased 12.4 percent to $22.6 million from $25.8 million in the third quarter of 2009. Service revenues decreased 18.5 percent to $12.4 million compared to $15.2 million a year ago.
At the end of the third quarter of 2010, the original acquisition cost of the company’s rental fleet was $665.5 million, down $28.6 million from $694.1 million at the end of the third quarter of 2009 and down $9.6 million from $675.1 million at the end of 2009.
Headquartered in Baton Rouge, La., H&E Equipment Services is No. 11 on the RER 100.
