H&E Equipment Services this week announced a 47.4-percent fourth-quarter revenue drop, plunging to $137.7 million compared with $261.9 million for the fourth quarter of 2008. Equipment rental revenues decreased 42.3 percent to $40.8 million compared with $70.8 million for the same period in 2008.
For the full year of 2009, total revenues decreased 36.4 percent to $679.7 million compared with $1.1 billion in 2008. Equipment rental revenues for 2009 dropped 35.2 percent to $191.5 million compared with $295.4 million in 2008.
For the fourth quarter, adjusted EDIBTA plunged 67.2 percent to $19.6 million, or a 14.2-percent margin, compared to $59.8 million, or a 22.8-percent margin a year ago. Loss from operations was $12.3 million compared to income from operations of $8.5 million in Q408.
“The unprecedented challenges our business and sector encountered during 2009 continued into the fourth quarter, as demand remained low and pricing remained weak,” said John Engquist, H&E president and CEO. “We fully expected a challenging quarter and we saw little to no improvement in the segments of the economy that drive demand for our products and services. Despite the difficult environment we faced during the year, we were successful in our efforts to scale our business to current market conditions by focusing on costs, asset management, debt reduction and cash generation.”
Gross margin on rentals for the fourth quarter decreased to 27.1 percent from 45.6 percent in the fourth quarter of 2008 because of lower time utilization and rental rates declining 18.5 percent compared with rental rates in the fourth quarter of 2008 and 2.3 percent compared to the third quarter of 2009. Time utilization was 53.3 percent in the fourth quarter compared to 63.8 percent in the year-ago quarter. Dollar utilization was 23.9 percent compared to 35.6 percent for the fourth quarter of 2008.
For the full year, new equipment sales dropped 44.1 percent to $208.9 million compared with $374.1 million in 2008. Used equipment sales for the year dropped 45.9 percent to $87 million compared to $160.8 million in 2008.
On the positive side, the company was able to reduce debt under its senior secured credit facility by $76 million, with cash on hand increasing by $34 million. “The credit facility was fully repaid and we strengthened our cash position during the weakest quarter of the year,” said Leslie Magee, H&E’s chief financial officer. “Despite the drop in sales volume and the resulting negative effects on pricing, margins and profitability, we also significantly reduced costs. As a result of our efforts on cost control, combined with our debt reduction and cash generation, our leverage remains at low levels. Other successes in 2009 include reducing the investment in our rental fleet by $111 million, or 14 percent, and lowering inventories by $34 million or 26.5 percent throughout the course of the year.”
CEO Engquist said there are some encouraging indicators that could have a positive impact on H&E’s business in 2010.
“Recent economic data suggests a better year in 2010 for the overall economy and some of the major equipment manufacturers are forecasting improved business conditions during the year. However, we believe the recovery in our sector will lag that of the general economy and we expect any improvement in our end markets to occur in the latter part of the year. With this in mind, we will continue our strategy of strengthening our balance sheet through cash generation. This focus better positions our company to take advantage of future opportunities when the recovery begins.”
Based in Baton Rouge, La., H&E Equipment Services is No. 9 on the RER 100.